New Law Affecting Uber and Lyft Ridesharing Insurance Coverage
The Advocate | Insurance Coverage | Rideshare
November 10, 2015
With the help of mobile technology, the “sharing economy” is booming. Smartphone apps allow us to arrange services through a simple tap of the screen. Transportation, a service traditionally available only through public transit or taxis, is now offered by ordinary drivers using their own vehicles to take nearby passengers to their desired destination for a fee less expensive than a taxi and in a manner more efficient than a bus. Businesses like Lyft and Uber that offer this service, called ridesharing, have become wildly popular in cities like Seattle that do not boast of a stellar public transportation system. Now, you need not wait on the corner hoping a cab will drive by, or rely on a bus schedule that can be unpredictable. You can request a ride, get a price quote, enter your destination address, track your driver’s location and time estimate until arrival, and pay the fare without ever getting out your wallet. It is an enticing new way to get around.
However, until recently, insurance coverage to passengers in rideshare vehicles was questionable at best. Personal auto insurers caught on to the ridesharing phenomenon early and began inserting exclusions into their policies which barred coverage to anyone involved in a collision if the rideshare vehicle was used for “commercial, non-personal purposes.” This meant that the only coverage available to a person injured in a collision involving a rideshare vehicle was the coverage afforded by the ridesharing company itself, which was frequently minimal and sometimes non-existent. Prior to July 2015, rideshare insurance was completely unregulated in Washington State. There was a big risk to passengers climbing into an Uber or Lyft that, in the event of a car collision, they could be left underinsured or barred from coverage completely, depending on the at-fault driver’s personal policy, the rideshare driver’s personal policy, and whether the ridesharing company had decided to purchase any commercial insurance at all.
This all changed in July 2015 when the legislature enacted Senate Bill (SB) 5550. The new law establishes statewide mandatory minimum commercial insurance limits for all ridesharing vehicles on the roadway. SB 5550 creates regulations for “commercial transportation services” as separate and apart from other public transportation and vehicles for hire already regulated by state law. The law clarifies that commercial coverage must begin as soon as the driver logs into their ridesharing network and is waiting for a fare request.
At all times before the driver has accepted a ride, the law requires that the vehicle be covered with minimum liability benefits of up to $50,000 per person/$100,000 per accident, as well as $30,000 for property damage, and Underinsured Motorist (UIM) benefits and Personal Injury Protection (PIP) coverage to the extent required by existing law (currently UIM minimum to match the liability coverage, and PIP minimum of $10,000).
Once the driver accepts a ride and is in route to pick up the passenger, the coverage increases to single limit liability coverage of $1 million, UIM coverage of $1 million, and PIP coverage to the extent required by existing law. This coverage remains in effect until the passenger exists the vehicle.
Under the law, the ridesharing company has the duty of obtaining proof that their affiliated drivers have insurance coverage. If they do not, the company must provide it anyway. Furthermore, if a driver is logged into more than one ridesharing network at the same time (both Uber and Lyft, for example), responsibility is split equally between the companies.
The new law also prohibits insurance companies from denying personal auto insurance coverage to an insured solely on the grounds that the vehicle is also used for ridesharing. This protects drivers who want to participate in the ridesharing economy, but need to still drive their cars for personal use.
The law also requires the ridesharing company to cooperate with all collision-related investigations and to retain all data and communications related to the crash for up to fourteen months.
SB 5550, now in effect, regulates ridesharing insurance coverage and is a drastic improvement in providing public safety to Washington citizens, given the widespread use of ridesharing. It ensures better coverage and protection for consumers using this new mode of transit.
If you have a patient who was injured while in a Lyft or Uber and they are getting the run-around from insurers, drivers, or ridesharing businesses on who is responsible for payment of treatment, simply have them give us a call for a complimentary consultation.