Insurance and Ridesharing: Know What You’re Getting Into

On the surface, sharing a ride seems like a win-win situation that is a no-brainer for any set of passengers who are heading the same way. You save money and you reduce your carbon footprint at the same time. What could possibly be bad about that?

Well, there really isn’t anything bad about it, provided it’s a group of friends or peers travelling to work or some other destination together. Most states even provide special carpool lanes to encourage such activity. The problem comes when an unlicensed commercial vehicle gets involved; i.e., sharing a car service such as an Uber or Lyft.

These new services are effectively taxis, but they aren’t licensed or regulated the way taxis are in most areas. Part of the licensing system for taxis is that the drivers must bear some  sort of insurance to cover damages to both passengers and third parties. In other words, if you’re in a licensed taxi, you really don’t have to worry about any liability stemming from an accident unless you did something crazy that directly caused the accident.

That isn’t necessarily the case in ridesharing vehicles that don’t carry the same insurance. Now, the larger companies (such as Uber and Lyft) usually voluntarily provide their own insurance to passengers in the event of an accident caused by the driver. The thing to watch out for is an accident caused by another driver while you are in the car. If the other driver is found to be at fault, then the liability falls on their insurance. But what if they aren’t insured, or are underinsured?

Lyft and Uber offer the same level of protection to their passengers in the event an uninsured or underinsured driver causes an accident that they do for accidents caused by their own drivers. So those two services are fairly safe to use. Smaller services, however, do not necessarily extend this protection. Sidecar, for example, only offers this protection in Washington state and the city of Chicago. In other locations and with other services, you may have no recourse for injuries or damages to your property caused by an uninsured driver.

The lesson to take from all this is to carefully brush up on the policies of your ridesharing carrier of choice. These companies are still operating in a grey legal area, and it will likely fall to individual states and localities to determine what level of regulation they will end up being subject to going forward. In the meantime, if you’re in a situation that requires legal assistance, contact us to get a response from an experienced attorney.


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