Drivers for ride-sharing services such as Uber and Lyft are under increased attack from insurance companies. However, there is less publicity regarding ride-sharing passengers and their insurance coverage. Are they covered during ride-sharing, and if so, by whom? The answer is not always clear.
Both Lyft and Uber have $1 million of liability coverage along with $1 million of uninsured/underinsured motorist coverage, in case passengers in a ride-sharing vehicle are injured by another motorist with insufficient coverage. According to Lyft's website, this coverage applies from the time the rider accepts a ride request until the time the ride is officially ended in the app (presumably, after the passenger has exited the vehicle).
It would seem that for most cases, the policy of the ride-sharing company will cover your costs — but it's not obvious whether you will have to go through other insurance paths first. Theoretically, damages could be covered by the ride-sharing company's liability if your driver was at fault, a third-party's insurance company if they were at fault instead of the driver, or your own personal auto insurance company. Insurance is state-regulated, and as Lyft's website notes, "...coverage may be modified to comply with local regulations and state laws."
Both Uber and Lyft make it clear on their terms and conditions pages that passengers assume risk in using their services. Experts think the disclaimers alone are not likely to shield Uber and Lyft from liability when push comes to shove, especially if the ride-share driver is clearly at fault.
What happens if a third-party driver is involved or causes the accident? If fault is in question, it's not obvious with whom a harmed passenger should be filing a claim. There's no guarantee that third-party coverage is sufficient, or whether ride-sharing services can force you to go through the third party's insurance if the fault is still in question.
The Insurance Information Institute published a recent ride-share Q&A sheet stating that passenger's personal auto policies would probably not apply since they are not underwritten to take on that risk. Others in the insurance industry have stated that passengers may be covered by their own insurance policies up to their personal injury protection (PIP) limits depending on their state's regulations. However, unless you somehow caused the accident as a passenger, your insurance should only be the claim of last resort.
Some clarity may be provided by an unfortunate test case near Sacramento, where 24-year old Lyft passenger Shane Holland was killed in November 2014 in an accident on Interstate 80. As of this writing, it isn’t clear how fault will be assigned and who will pay for the collective damages. PropertyCasualty360° reports that Lyft's policy is expected to cover the accident regardless of fault.
There is another odd case from September 2014 working through the court system in San Francisco regarding an Uber driver that got into a heated argument with passengers and ended up attacking one of them with a claw hammer. Do the liabilities intended for car accidents cover attacks by a driver? That remains to be seen.
Ride-sharing rules on insurance coverage are still being hammered out on state and local levels, as are the legality and licensing requirements. Given their popularity, it seems like ride-sharing services are here to stay, and it's important for you to check the current rules before using them. By the time you read this article, the rules where you live (or at your travel destination) may have changed.
Check with both sides of the argument — the ride-share company and the appropriate state insurance commission. Certainly, it’s an annoyance, but it may save you many thousands of dollars if you're involved in a ride-sharing accident. Without local clarification, you could end up in legal and insurance limbo.
Photo ©iStock.com/Jason Doiy