New Haven Register (Sunday) (New Haven, CT)
Insurance coverage considerations when a ride-share trip goes bad
Ride-sharing services such as Uber and Lyft have refashioned the private transportation market. The rise in ride-sharing makes getting to where you need to go easier than ever before — but not without risks.
One of the biggest issues facing this industry involves the type and amount of insurance coverage that ride-share companies provide for their drivers. The main question: in the event of an accident, who pays?
The answer is not as clear as you might think.
Companies like Uber and Lyft are legally classified as Transportation Network Companies. TNCs do not own any of the vehicles. Rather, they simply facilitate transactions between a hired driver and passenger via a mobile app. This ownership loophole creates an opportunity for TNCs to deny insurance coverage to their fleet, unlike other ride services such as taxicabs and limousines.
In 2016, the National Association of Insurance Commissioners adopted
recommendations on insurance coverage in this new ride-sharing economy. It proposed the simplest solution to limitations and coverage gaps in the rideshare market was either that a driver purchase his or her own commercial coverage or that a TNC provide full coverage for the driver during working hours.
Specifically, the NAIC found that liability coverage, uninsured/underinsured motorist coverage, comprehensive and collision coverage, and medical coverage all should be required and provided by either the TNC or the driver personally.
Connecticut passed its own version of a TNC statute in 2018 and did so
by separating insurance requirements into two periods. The first period occurs when the driver is connected to the TNC’s app and is available or waiting to receive a request for a ride but has not yet confirmed a ride. During this first period, Connecticut law requires automobile liability insurance coverage of at least $50,000 for damages due to the bodily injury or death of any one person; $100,000 for damages due to bodily injury or death per accident; $25,000 for property damage; and uninsured and underinsured motorist coverage with commensurate limits.
The second period occurs when the driver is actively engaged in a confirmed ride — covering both when a driver is enroute to pick up a passenger and when the driver
has a passenger in the vehicle. Here, Connecticut requires automobile liability insurance coverage of at least $1,000,000 for damages due to bodily injury, death, or property damage per accident; as well as uninsured and underinsured motorist coverage.
In the event of an accident, Connecticut allows insurance coverage requirements to be satisfied by an automobile liability policy maintained by a TNC, a driver, or a combination of both. This flexibility written into the Connecticut statute is a protection for drivers and victims.
Despite Connecticut’s seemingly flexible regulations, some would argue that TNC insurance regulations remain inadequate. By connecting the amount and type of coverage to whether a driver has confirmed a ride, a TNC
theoretically can transfer significant legal liability to the driver. In other words, in the event of an accident in which the app has not been triggered, the driver — not the TNC — may be liable.
As evidenced by several recent cases against both Uber and Lyft, the concern regarding the adequacy of insurance coverage in the ride-share industry continues to grow. Since personal automobile liability policies generally exclude business use, the best way for drivers to protect themselves is to obtain and maintain their own commercial automobile liability insurance.