Ride-share apps like Lyft, Sidecar and Uber are simple. You press a button on your smartphone and a few minutes later your car arrives. Auto insurance on the other hand, is complicated and when that smiling driver shows up to shuttle you across town, liability claims and underinsured motorists are the last thing on your mind. As the City Council continues to debate whether and how to regulate the ride-share business, some of the discussion, according to a council staff member, will center on deciding if companies have adequate insurance protection for riders, drivers and anyone else involved in an accident with a ride-share vehicle.
On the surface, it seems that ride-share companies actually provide more liability coverage than taxis. Lyft, Sidecar and UberX all say they have $1 million liability policies — more than three times the $325,000 required by the city for taxi drivers.
By contrast, many taxi drivers choose to carry the least amount of coverage required by the city. At least according to Robert Rashidi, an agent for Top Notch Insurance, a company that specializes in taxi insurance in Seattle. “They always shop for the lowest premium and lowest required coverage,” he said. “They always ask if we can talk to the state, or the agency and see if they will take a lower amount.”
But each of the three big ride-share companies has refused to comply with City Council requests for copies of their liability policies. “Different companies have given us different reasons," says Jesse Gilliam, an aide in Council President Sally Clark's office. "Generally that it’s proprietary and between them and the insurance company.”
"From our perspective, it would definitely be helpful if we knew more about the insurance," he said. Clark chairs the Council's Committee on Taxi, For Hire and Limosine regulations — one of the venues where the ride-sharing discussion is unfolding.
Liability insurance is designed to protect passengers, pedestrians and other drivers who are harmed in a crash that is the policyholder's fault. If a ride-share driver hits a pedestrian, for example, the driver's liability insurance pays for their injuries. If another driver hits a ride-share car, then that driver's insurance pays for the damages to the vehicle and any injuries to the ride-share driver and passengers. Some uncertainty arises though if an uninsured or underinsured motorist hits a ride-share car and is at fault.
When Crosscut asked Lyft, Sidecar and Uber whether their liability policies would cover that scenario, the companies declined to comment, or dodged the question in emailed replies. Taxi drivers are required to carry $100,000 per-person and $300,000 per-incident coverage for collisions with uninsured or underinsured motorists. Personal auto insurance companies in Wash. are required by law to offer uninsured and underinsured motorist coverage, but drivers can choose to waive it, which means ride-share drivers may or may not be covered for these scenarios.
David Schoeggl, a Seattle-based lawyer and law professor who specializes in insurance and professional liability cases, warns that details like this matter when it comes to insurance policies. “Insurance is talked about like a commodity, but when a claim is made it’s treated like a contract. Everyone pulls out the terms and goes through the fine print,” he says. Schoeggl also cautions that the driver could be responsible if the damages in an accident exceeded the ride-share company’s liability coverage and that in lawsuits involving taxis, and even ice cream trucks, companies commonly distance themselves from their drivers in court.
Rashidi, the taxi insurance agent, says he's seen the same thing in cab accident court cases. “As a cab operator," he said. "The company is not your employer and is not liable for what you do."
Lyft, Sidecar and UberX all verify that their drivers have personal auto insurance policies that meet Washington's required minimum standards, but insurance agents, company representatives and trade group spokespeople say that drivers risk voiding their personal policies if they carry ride-share passengers. That's true even in the case of collision insurance, which ride-share drivers might think would cover the cost of repairs to their own vehicle if they got into an accident.
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