Uber Admits Drivers Were Operating Without Sufficient Insurance

Ride sharing app company Uber has come out and admitted that its drivers had a serious hole in their insurance coverage. Basically, Uber has purchased a new insurance policy that covers its drivers between fares.

An Uber Driver and her car

An Uber Driver and her car

Uber’s old insurance only covered drivers when they were hauling an Uber passenger or driving to pick up one. The problem with that was the drivers were not covered between fares. That became an issue when a six-year-old girl was struck and killed by an Uber driver in San Francisco.

The girl’s family sued Uber, claiming that it was responsible. Uber tried to claim it wasn’t responsible because the driver was waiting for a fare. Basically, Uber was trying to say its driver wasn’t on duty when he wasn’t hauling a passenger. The California Department of Insurance didn’t buy that argument. It found that Uber’s insurance coverage was deficient, which was undoubtedly music to the ears of the nation’s personal injury attorneys.

Uber Admits Old Insurance was Deficient

Now Uber has purchased a new insurance policy that will cover drivers between fares, according to The Los Angeles Times. The policy will provide liability coverage that covers an Uber driver when he or she is between fares, but it’ll only cover damage not covered by a driver’s normal car insurance policy.

Some news stories indicate that Lyft has beefed up its insurance coverage as well, yet full details are not available because insurance requirements vary widely from state to state.

So what should a person who’s making money with a ride sharing app such as Uber or Lyft do? The best piece of advice would be to talk to an insurance broker who knows the law in your state really well. Chances are you might have to purchase additional coverage.

You’ll need to speak to a broker because a lot of insurance agents are not familiar with special situations like car sharers. Brokers are also more likely to work with companies that issue specialized business insurance or bonding, which might be required for a car-share driver.

Something drivers should be leery of is statements that the new insurance only covers damage and injuries not covered by the driver’s policy. That means Uber or Lyft drivers could still be liable for lawsuits arising from an accident. It also sounds like a recipe for a very nasty legal battle between Uber’s insurance company and the driver’s.

The bottom line is that you should be skeptical of new business models like Uber. The geeks who think them up have a bad habit of not thinking about things like insurance until the summons server comes knocking on their door.

If you’re planning to use your personal vehicle for any business purpose, you need to check on insurance requirements yourself. Never assume that you will be covered by an employer’s insurance until you see it in writing. Nor should you assume that your regular insurance will cover you.

Make sure you know exactly what’s covered and what’s not. Ask to see a copy of the insurance policy and read it. Then takes steps to make sure you have sufficient coverage so your moneymaking activity doesn’t destroy your financial future.