There is a recent boom in a brand new industry — ridesharing services such as Uber and Lyft. As more and more vehicles with pink mustaches appear on the streets, more and more traffic accidents will occur in which the challenging question, “Who is financially responsible?” will be asked.
Taxis and Limousines
In traditional transport services such as taxis and limousines, there are requirements for commercial insurance policies for the transportation companies and their drivers. Even in situations where the taxi driver is considered a sub-contractor of the taxi company, there are still typically state and local requirements for large insurance policies to be in place. Essentially, if someone is injured as a the result of a motor vehicle accident caused by a negligent taxi driver, there will virtually always be a large insurance policy available to cover their injuries and property losses.
Insurance Arrangements with Ridesharing Services
The new ridesharing services, however, have much more of an “arms length” relationship between the service — whose smartphone application acts as a communication tool between customer and driver — and the people who are picking up fares and driving them about. Until recently, there has been no separate requirement for these drivers to carry any insurance coverage beyond whatever minimum amounts may be required for private drivers in general. In California, for example, this is only the $15,000 per person / $30,000 per accident coverage that all drivers are required to have.
Although the ridesharing services have begun to carry their own liability insurance coverage, the requirements for this are still very sketchy. Cities and states are only just beginning to draft rules to cover this new type of business arrangement, and accidents involving ridesharing companies are just starting to test the insurance and legal processes for people injured in accident involving ridesharing services.
Ridesharing Services vs. Taxis
There are other matters to be resolved as well.
A taxi driver who is driving his taxi during his work day is obviously acting as an employee. A ridesharing driver, however, may choose to be looking for fares whenever they like. Is a ridesharing driver who just dropped off a passenger still “on the clock” for this ridesharing service if he gets in an accident a minute later?
The driving records of taxi and limo drivers are usually monitored by their employers — they don’t want to be employing drivers who have serious problems on their driving records. To some degree, this increases the safety of their passengers. What, if anything, will the ridesharing services be doing to monitor their drivers? If they don’t monitor them, should this increase the financial responsibility of the ridesharing services to passengers and other members of the public who are injured by their drivers?
This is a brand new industry that is expanding quickly due to the easy spread of the communications technology that makes it possible. Local and state governments and insurers are hurrying to catch up.
If you in a motor vehicle collision, including one involving a ridesharing serivce, call me now at 916.921.6400.