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Lyft, Uber expand insurance policies as council vote nears

The companies add coverage for drivers but it falls short of what at least one critic would like to see.

With the Seattle City Council set to vote on ridesharing regulations next Monday, Lyft and Uber have announced more insurance coverage for the drivers using their apps. 

The expanded insurance addresses a potential gap in liability coverage that has worried officials and regulators in Seattle and elsewhere. The move would also help the companies comply with the regulations proposed by the council.

Both of the taxi-like companies said they would broaden their liability insurance policies to cover drivers who are logged into their apps but not carrying passengers. Prior to the change, the policies apparently only covered drivers from the time they hit the button on their smartphone to accept a passenger until the time the ride ended.

Whether drivers were covered by their personal auto insurance while they were logged into the app waiting for riders has remained unclear. Most personal auto insurance policies are void if a driver is using their car to carry passengers for money. This raised the possibility that drivers awaiting riders could be driving around uninsured.

The proposed council regulations require that the companies’ policies cover drivers any time they are logged into the apps. The council ordinance refers to services like Lyft and Uber as Transportation Network Companies, or TNCs.

“What we wanted to do is make sure that ambiguity goes away,” Uber Technologies co-founder and CEO Travis Kalanick told reporters during a conference call on Friday.

An accident in San Francisco last year highlighted the coverage gap. An UberX driver who was not carrying a passenger, but was logged into the app, allegedly hit and killed a 6-year-old girl, Sophia Liu. The girl's mother was also hit and severely injured. The Liu family has filed a wrongful death lawsuit against Uber and the driver. 

Shortly after the accident the company distanced itself from the driver, saying in a statement that he "was not providing services on the Uber system during the time of the accident." 

Kalanick said Friday that the driver’s personal auto insurer had agreed to pay damages, but that he did not know in what amount.

Chris Dolan, a lawyer who is representing the Liu family, took issue with the statement. “It’s a fraud and he knows it,” Dolan said.

Dolan said that the driver's personal auto insurer would only pay $15,000. The girl's mother, he said, is still in the hospital with a head injury and her medical bills alone are approaching $500,000. Because the family did not have health insurance at the time of the accident, Dolan said the City of San Francisco would end up covering those costs if Uber does not pay any damages.

"I'm going to make Uber pay for it," he said.

Auto liability insurance pays for damages caused by the at-fault driver in a car accident. In Washington, personal auto policies must provide at least $25,000 for one person and $50,000 for any two people, killed or injured in an accident, as well as $10,000 for damaged or destroyed property.

Uber’s new policy covers damages and death up to $50,000 per person, $100,000 per incident and provides a maximum of $25,000 for property damage. The limits in the new Lyft and Sidecar policies were not immediately available.

Lyft, Uber and Sidecar all say they have $1 million liability policies that cover drivers when they are carrying passengers.

Taxi and flat rate for-hire drivers in Seattle are required to carry commercial policies that provide $325,000 per incident liability coverage, as well as $100,000 per-person and $300,000 per-incident coverage for collisions with uninsured or underinsured motorists who are at fault. These commercial policies, drivers say, can cost $450 per month.

The council’s proposal would match the underinsured motorist coverage limits for TNCs with those for the taxi and for-hire requirements. Uber and Lyft added that coverage to their policies in recent months. Sidecar has said it is working with their insurer to provide the coverage.


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Comments:

Posted Sat, Mar 15, 9:12 a.m. Inappropriate

The new insurance plans from UberX and Lyft are still based on insurance fraud. In an at fault accident, Uber requires their driver to file a claim with with his insurance first before Uber's plan kicks in. Since most of the driver policies are non-commercial, the insurance company will deny the claim and cancel the driver's coverage if they find out that the policyholder is using his vehicle for a taxi service.

What Uber is banking on is that the insurer won't find out that the driver had an accident while working for Uber. This is insurance fraud and it dumping the liability of Uber's accidents on the private auto insurance market, raising the rates for John Q Public.

The Seattle City Council should not be a party to insurance fraud. They Council should mandate that the UberX/Lyft/Sidecar vehicles carry commercial insurance just like a taxi.

Posted Sun, Mar 16, 2:23 a.m. Inappropriate

At a minimum, City Council should require that any insurance policy covering a TNC vehicle, whether provided by the driver/owner or by the TNC company, each of those policies must be explicitly valid for vehicles that carry fare-paying riders.

I agree with ClaimsAdjuster when he suggests that TNCs are engaged in fraud if they ask or require their drivers to file business claims on their personal non-commercial policies.

Remember Sophia Liu.

Posted Mon, Mar 17, 8:30 a.m. Inappropriate

Just a question: What kind of insurance are taxi companies and their drivers required to carry and is it any different from what is being asked of Lyft and Uber?

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