Uber and Lyft Ridesharing Insurance Coverage in New Jersey

Auto Accidents in Uber or Lyft in New Jersey

Uber, Lyft, and other ridesharing services allow you to use a mobile app to connect you with a driver in minutes.  Ridesharing drivers, who typically have other jobs and use these services to supplement their income, are able to work their own hours and use their own vehicles to transport customers.  Although these services are convenient and often times cost far less than the price of commercial taxis or limos, they also raise several issues with respect to insurance coverage – issues that most ridesharing passengers, and even drivers themselves, rarely, if ever, think about.

Uber does provide its own commercial insurance policy, which is issued by the James River Insurance Company.  According to Uber, their insurance is “best in class” and has been rated A- (excellent) by A.M. Best, the insurance industry’s standard rating agency.  If you are an Uber or Lyft driver who is involved in a motor vehicle accident, or if you are a pedestrian or a passenger in an Uber or Lyft vehicle that is injured in an accident, whether or not the ridesharing services’ commercial insurance policies will provide coverage will depend upon exactly how the ridesharing driver was using the app at the time of the accident.

Possible Scenarios Dealing with Insurance Coverage in New Jersey

Each of the possible scenarios dealing with insurance coverage are discussed in further detail below and can be broken down into the following three categories: (1) the ridesharing app is off and the driver is not available to accept a trip; (2) the ridesharing driver is either en route to pick up a passenger or is on an actual trip; or (3) the ridesharing driver is between trips but is available to accept a trip.

Ridesharing App is Turned Off: No Commercial Coverage

When an Uber or Lyft driver is driving their personal vehicle when the ridesharing app is turned off, meaning the driver is offline and they are not available to accept a trip, the driver’s own personal automobile insurance company would provide coverage.  Thus, the ridesharing services’ commercial policy would not come into play and in this scenario, the coverage limits, exclusions, and terms of the driver’s own personal auto policy would apply.

Ridesharing Driver Accepts Trip and Is En Route to Pick Up Passengers Through the End of the Trip: Commercial Coverage

According to Uber, from the moment a driver accepts a trip and is en route to pick up passengers until the time when the passengers are dropped off, Uber’s commercial insurance policy, which in New Jersey provides $1.5 million in liability coverage per accident to passengers or any third parties, kicks in.  This policy is primary to any other applicable personal automobile policy.

Moreover, Uber’s commercial policy also contains $1.5 million of Uninsured/Underinsured coverage per accident.  Thus, if an at-fault driver causes an accident with an Uber driver, and that driver is either uninsured or not adequately insured, Uber’s policy would provide bodily injury coverage to all occupants of the Uber vehicle.  Thus, regardless of who is at fault, $1.5 million of coverage would be in place for Uber passengers.

With respect to comprehensive and collision insurance, Uber’s coverage is contingent.  In general, collision coverage reimburses a vehicle owner for property damage if they hit a car, pole, or other non-living object.  Comprehensive coverage, on the other hand, reimburses a vehicle owner for damage caused by an event other than collision, such as theft, fire or vandalism.  Since Uber’s commercial comprehensive and collision insurance is contingent, it would apply only if the Uber vehicle driver owns their own personal comprehensive and collision insurance policy and only if their personal insurance company denies coverage.  Coverage provided will be up to the cash value of the vehicle with a $1,000 deductible.

To view Uber’s New Jersey Certificate of Insurance for the commercial policy covering the period of time from accepting a trip until the trip has ended and the rider has exited the vehicle, click here and see the first page.

Lyft also states that, in this scenario, their liability insurance will act as primary coverage during the time the driver accepts a request for a ride, until the time the ride has ended, and will provide $1 million in coverage per accident and $1 in uninsured/underinsured coverage per accident.  Lyft further states that it provides contingent collision and comprehensive insurance coverages for its drivers, which apply so long as their drivers have collision and comprehensive ccoverage on their personal auto policies, and provide $50,000 in coverage with a $2,500 deductible.

Ridesharing App is On But Driver Has Not Accepted a Trip: Contingent Commercial Coverage

While Uber’s insurance was originally limited to providing coverage when the Uber driver had either accepted a trip or was on an actual Uber trip, over time Uber has added more coverage to include the time between trips, when the Uber app is open but a driver has not yet accepted a trip.

Uber’s current position is that, during the period of time when an Uber driver has the Uber app open and is online, but has not yet accepted a trip, most personal automobile insurance carriers should provide coverage in the event that the Uber driver was involved in an accident.  Despite Uber’s position, many personal auto policies contain exceptions that exclude coverage for commercial activities, such as transporting passengers for hire.  Thus, if made aware that their insured at the time of the accident was on duty with Uber with the app open, or was in between trips, many insurance carriers in New Jersey would likely deny coverage.

In fact, a highly publicized similar scenario was the subject of a lawsuit after a six-year-old girl was killed in California and was struck by an Uber driver.  Uber denied insurance coverage, claiming that the driver was not en route to pick up a passenger or on a trip.  The family, however, argued that the driver had his app open, was online, and was distracted his the app at the time of the accident.  In the end, the driver’s personal auto insurance company offered the policy limits.

Many feared, however, that an “insurance gap” existed in this scenario, whereby both Uber and the driver’s personal insurance policy might deny coverage based on ambiguities in policy language.   Thus, effective March 14, 2014, Uber added contingent “insurance gap” coverage to cover those instances when a driver who does not have passengers and is not on their way to pick up passengers, but is logged into the Uber network and is available to accept a ride.

Thus, in the event the driver does not have personal insurance coverage during this period of time, whether due to the fact that their auto insurance company denies coverage or the driver simply does not have insurance, Uber’s separate contingent commercial policy would cover the driver’s liability for bodily injury up to $50,000 per person for injuries with a total of $100,000 and up to $25,000 for property damage.

To View the New Jersey Certificate of Insurance for the policy covering the period of time from logging on to the Uber app until accepting a trip, click here and see the second page.

With respect to Lyft, when the driver mode is turned on but the driver has not yet accepted a ride, Lyft states that it will provide contingent liability insurance that will kick in if the driver’s personal auto insurance does not cover the accident.  Coverage provided includes $50,000 per person for injuries, $100,000 per accident, and $25,000 for property damage.

Have an Experienced New Jersey Auto Accident Law Firm Protect Your Rights

In short, if you are hit by a ridesharing driver who has not yet accepted a fare, or if you are a ridesharing driver and someone hits you while you are on duty but have not yet accepted a trip, insurance issues may arise.  As explained above, liability coverage drops down to $50,000 per person, but you may have a hard time even getting that, since Uber and Lyft both consider their driver’s personal auto policy to be primary in a case like this, and, therefore, they are not eager to pay out.  The driver’s personal auto policy, on the other hand, may deny coverage if it learns that the driver was using the vehicle for a commercial purpose, resulting in them denying the claim and possibility even canceling their policy entirely.

If, on the other hand, if you were involved in a ridesharing accident that occurred while a driving was en route to accepting a trip or while on a trip, you may be surprised to learn that the ridesharing liability policy, with its million dollar-plus coverage limits, becomes primary.

If you were a pedestrian or a passenger in ridesharing vehicle that was involved in an accident, or if you are an Uber or Lyft driver yourself and you have issues regarding your insurance coverage, contact us today at (908) 264-7228.  The New Jersey auto accident lawyers at Harrell, Smith and Williams will guide you through these complex insurance coverage issues to obtain the compensation you deserve.  Contact us today.

Posted in Auto Accident, automobile insurance, Injured Passengers, Personal Injury.