Uber, Lyft and Your (Likely) Denied Insurance Claim

I found myself at the Tampa Airport the other day at 1:00 a.m. without a ride home. A friend who was supposed to pick me up wasn’t there, she didn’t answer her cell phone and it was getting late. I really have a principled objection to paying a $60.00 fare for a 20-minute taxi ride so I was looking at ordering a ride from Uber (my friend finally arrived so my first Uber experience will have to wait). If you don’t know Uber (and their competitor, Lyft), they are a “ride-sharing” service and they operate through an app on your smartphone. Essentially it’s people driving their personal automobiles in their spare time to pick up paying passengers and it’s usually less expensive than a taxi (about $25.00-$33.00 in my case). It’s an interesting idea that’s disrupting the traditional taxi and limo business (and, in some cases, triggering litigation by local and state governments because of their alleged skirting of applicable local laws and regulations).

imagesMy guess is that the Uber and Lyft drivers are mostly people trying to make some money in their spare time. But, they’re using their personal automobile to ferry passengers around town. In the years I have been litigating and trying cases on behalf of and against insurance companies, I have never seen a personal automobile insurance policy that would cover this type of activity. In fact, they almost always include a specific provision that excludes coverage if the automobile is used to “carry persons or property” for money. This would certainly exclude coverage for any activity related to picking up paying passengers for Uber and Lyft. This would mean that if you have an accident, your personal automobile insurance would likely deny coverage. Uber and Lyft do; however, include “excess” liability and comprehensive coverage that is triggered if there is an accident while driving a passenger.

While I have not read the specific “excess” insurance policies that Uber and Lyft offer, I did see on Uber’s website that they include $1M in liability coverage (good) and $1,000.00 in comprehensive coverage (very bad). This would mean if you crash your new Lexus while driving a passenger and the accident is your fault (or someone else’s fault and they have minimal or no property damage coverage), you could be out the cost of that new Lexus. In addition, it’s likely you would not receive personal injury protection (PIP) and any medpay benefits under your own policy if you were injured while driving. So, while Uber and Lyft may offer an adequate amount of liability protection to passengers, their drivers are significantly exposed if they are hurt or the damage any vehicle in an at-fault accident.