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Who Pays for a Crash Caused by an Uber or Lyft Driver?

Man calling an uber driver instead of a taxi after a crash

Injured in an Uber or Lyft Accident? Here’s Some Advice

Surely, the people reading this article, especially Millennials, are familiar with Uber and Lyft, the two giants of the “disruptive” ride-sharing industry. Now valued at billions of dollars each, these companies have achieved enormous success at an extremely rapid pace. There are two primary reasons for their success: convenience and competitive rates.

How Uber and Lyft Work

Uber, Lyft, and other ride-sharing companies use the ubiquitous ownership of smartphones to connect passenger clients through their proprietary applications. To put it in simpler terms, they offer personal transportation services that can be requested with the push of a button (on an app). Once a ride seeker has made a request, the closest available driver is notified and sent to his or her location. It’s as simple as that. This certainly beats having to call or wait for a taxi and flag it down.

Uber and Lyft rides also price their rides at a very cheap rate, relative to taxi fees. They accomplish this by labeling their drivers as contract workers, not employees, which, in turn, allows them to externalize costs like gas, payroll, etc. so that profits are maximized and expenses are kept to a minimum.

Employee obligations and benefits aren’t the only things they’ve cut down on, though; they have been able to skirt insurance liabilities as well through the use of convoluted mumbo jumbo in their respective policies.

The Ride-Sharing Liability Dilemma

To their credit, both Uber and Lyft provide adequate coverage to injured passengers. However, matters get quite murky when it comes to accidents involving other drivers, pedestrians, bicyclists, and so on. While both companies have expanded their coverage to include accidents incurred during a gap between rides, their policies come into effect only if a driver’s personal policy does not cover the accident. Many questions immediately come to mind:

  • What happens if the resulting damages of an accident exceed the driver’s coverage? Who or what fills this insurance gap? Does the victim have to turn to his or her own resources?
  • Isn’t personal policy coverage ineffective in cases where the liable driver was driving for commercial purposes? If this is the case, who covers the damages?

A Complex Legal Issue

Clearly, there are significant issues surrounding third-party liability insurance in the ride-sharing industry, and many are starting to realize this fact. Legislators in multiple states, including California, have challenged Uber and Lyft on their policies, and there will be many legal disputes in the coming years before clear regulations are established.

At Wilshire Law Firm, our knowledgeable attorneys stay on top of the latest developments in ride-sharing accident liability law. Visit this page on Uber and Lift liability if you would like to learn more.