What Uber Drivers Must Know About Car Accident Insurance

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Auto insurance maintained by the company covers Uber drivers under certain circumstances, but there are limitations. In reality, Uber drivers are exposed to potential liability every time they pick up a passenger. They could be subject to liability for the passengers’ personal injuries if they are hurt in an accident involving the Uber driver. Indeed, the driver could be liable even if they were not at fault for the accident because they owe a higher standard of care to their passengers as commercial operators.

Personal Auto Policy vs. Commercial (Uber) Auto Policy

Every driver hopefully carries personal auto insurance, which is required in most states and countries. Some states even require a minimal level of coverage for vehicle insurance policies. The auto insurance covers the driver and their vehicle for accidents related to their vehicle’s personal use. Before Uber, the distinction between personal use and commercial use of vehicles was generally clear. Commercial operators, like taxis, carried commercial insurance policies, which often had higher levels of protection for passengers and drivers. Personal auto insurance was lower because the risk was lower.

Uber introduced a wrinkle in this former dichotomy by mixing personal and commercial use. Most personal auto insurance policies expressly deny coverage for injuries or damage sustained during commercial use. Indeed, many modern auto insurance policies specifically exclude coverage if the driver was using their vehicle for a rideshare program at the time of the accident. Rideshare drivers were liable for injuries to their passengers without coverage by an auto policy. Accordingly, Uber entered the auto insurance market by providing auto coverage (often mandated by state regulators) when Uber drivers use their personal vehicles for the company.

What Does The Uber Auto Policy Cover?

The Uber policy applies in two situations:

(1) while waiting for a ride request and

(2) while en route to pick up a passenger and during a trip.

While waiting for a ride request, the policy kicks in if the driver’s personal policy does not provide sufficient coverage on vehicle accidents. The administrative discrepancy here means Uber can require the driver to be denied coverage by their personal insurance policy before seeking coverage from the company policy. This approach’s problem is that drivers’ personal auto carriers could drop them or significantly increase their premiums now that the carrier is aware the driver uses their vehicle for commercial use. While waiting for a ride, Uber drivers are covered in the following amounts:

• $25,000 in property damage per accident,

• $50,000 in bodily injury per person, and

• $100,000 in bodily injury per accident.

Once an Uber driver receives a ride request, they are covered by an expanded auto policy. That policy provides $1,000,000 in third-party liability (similar to policies that cover taxi companies), uninsured or underinsured motorist coverage. The coverage contingent and comprehensive vehicle collision insurance provide replacement cash value for the vehicle after a $2,500 deductible (or $1,000 for certain vehicles). The contingent and comprehensive collision package kick in if the driver maintains a similar policy with their personal auto carrier.

Uber and Lyft drivers who operate black car and limo services through the app must obtain commercial-grade auto insurance. Moreover, Uber offers enhanced commercial coverage through insurance partners – at additional cost to drivers.

Potential Exposure For Uber Drivers

Uber drivers are still exposed to the gaps in the Uber insurance policy. For example, severe injuries that exceed the values described above could be recovered against the Uber driver personally. Moreover, Uber drivers face repercussions from their personal auto insurance carriers for using their vehicles for commercial purposes.

Commercial carriers can drop Uber drivers or require them to pay higher vehicle insurance premiums because they drive for Uber or other ridesharing companies. So always check your auto policy coverage and rates to avoid additional liability as an Uber or Lyft driver.