UBER INSURANCE

By Curtis B. Dooling

On New Year’s Eve 2014, an UberX driver in San Francisco struck a family crossing the street and killed a six year-old girl. This was the first – but likely not the last - tragic motor vehicle accident involving vehicles driven by Uber drivers or other ride-share companies.

What propelled this story after the tragedy was a wrongful death claim filed by the family of the little girl against Uber, which denied liability on the basis that while the UberX driver was available to pick up passengers, there were no passengers in the car at the time of the accident. If the regulatory scheme for ride-share companies is complex, the issue of liability is no less complicated.

Under the Massachusetts personal automobile insurance policy, all vehicles are required to carry bodily injury coverage of $20,000 per person and $40,000 per accident, with the option to purchase additional bodily injury coverage over the compulsory limits. This compulsory coverage is available only to individuals who are not occupants of the insured vehicle. Many ride-share drivers use their own personal vehicles when driving ride-share passengers, but don’t disclose their activities to their respective insurers. When insurers learn of this, usually after an accident, the insurer will disclaim all optional coverage, leaving only compulsory coverage available to all non-occupants of the insured vehicle. Thus, often times there is no coverage available under the driver’s auto policy for ride-share passengers injured during a ride-share trip.

According to Uber’s website, from the moment a driver accepts a trip request until that trip ends, Uber provides $1 million in liability coverage, including uninsured and underinsured coverage. This coverage is available to injured ride-share passengers, other drivers, and pedestrians, as long as the ride-share app is on and the driver has passengers. To the contrary, most taxi companies normally only carry the minimum in bodily injury coverage ($20,000 per person/$40,000 per accident). Therefore, Uber’s $1 million in liability coverage is significantly better than the average taxi’s insurance coverage.

However, there is a ride-share insurance gap. When an Uber driver has the ride-share app on but doesn’t have any passengers, does Uber’s $1 million insurance provide coverage? This issue first came to light after the tragic accident in San Francisco. The family of the six year-old girl filed a wrongful death lawsuit against Uber, which denied liability on the basis that the UberX driver, although available, didn’t have any passengers at the time of the accident. After much public outcry and criticism, Uber changed its policy to eliminate this insurance gap uncertainty. Since that time, Uber claims that its drivers are covered by bodily injury coverage from the moment that a driver turns on the app and is available for a trip request. However, the limits of coverage aren’t the same. If an Uber driver is available but has no passengers and hasn’t accepted a job, Uber provides $50,000 person/$100,000 per accident in coverage. Once a driver accepts a job, the $1 million in coverage becomes available.

Governor Charlie Baker is now weighing in on this topic with legislation that would create statutory standards to govern ride-share companies (referred to as Transportation Network Companies or TNCs). The proposed law would require that all TNC drivers carry the standard minimum automobile bodily injury coverage, effective when a TNC driver is available but before accepting a trip request. Upon accepting a trip request, a TNC driver then would be required to carry $1 million in liability insurance. The bill would bring all TNCs within the regulatory authority of the Commonwealth, and would subject TNC drivers to more stringent background and eligibility requirements. The proposed legislation has been vehemently opposed by the taxi industry, which argues that ride-share companies should be subject to the same regulation as the taxi industry.

As the popularity of Uber and other similar companies increases, regulators and lawmakers are responding with changes in the law that will affect liability coverage for ride-share companies, drivers, riders and those who may become involved in an accident with an Uber-driven vehicle. Pierce & Mandell’s attorneys have years of experience in all areas of insurance litigation and personal injury litigation.

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