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There is a smart phone application for almost everything now: adjusting your thermostat when you’re not home, recording your daily run and keeping track of your personal finances. Transportation apps such as Uber and Lyft that allow you to request a ride using your smartphone are becoming increasingly popular—and also controversial.

How does car insurance work in a claim against an Uber or Lyft driver? Who has the insurance -- the driver or the company? Who would the injured person make a claim against?


What are Uber and Lyft?


Uber and Lyft are two rideshare services that are classified as a transportation network companies, or TNCs. They are similar to taxi services; however, these companies do not own, operate, or control their cars, and they do not hire their drivers directly. The major differences between Uber, Lyft, and traditional car services are their pricing structures and how customers arrange rides with rideshare drivers.

Unlike taxis, a prospective passenger does not hail an Uber or Lyft driver on the street. Instead, a passenger must download the Uber or Lyft app to their smartphone and arrange for a driver to pick them up through the app. Pricing for an Uber or Lyft ride varies. Uber is known for its so-called “surge” pricing, meaning that its prices vary with demand. At peak times, an Uber ride can be far more expensive than at an off-peak time.


How Does Car Insurance Work for Uber And Lyft Drivers?


Uber and Lyft require all their drivers to have personal car insurance. Further, Uber and Lyft do provide some additional coverage for their drivers as supplemental insurance to the drivers’ personal insurance policies.


However, drivers should be aware that their personal insurance may not necessarily provide coverage for them while they are driving for these companies. This is because many private car insurance policies specifically refuse coverage for accidents that occurred while the driver was driving for pay. Every standard automobile insurance policy has a list of exclusions from coverage, and one of the exclusions in many states is driving for hire.


Will Personal Insurance cover an Uber or Lyft Driver during a claim?


Since TNC drivers use their vehicles for both purposes—business and personal—it has been a challenge to make the distinction between when a driver was simply driving his or her own car and when he or she was driving as a representative of the TNC. Uber and Lyft have clarified when different types of insurance cover drivers.

When a driver is driving with the TNC’s app off, the driver is not working and not accepting rides, so the driver’s personal auto insurance is the primary coverage. When the driver turns on the app, is in driver mode but has not yet accepted a ride, TNCs generally offer contingent liability coverage if the driver’s personal auto insurance does not offer protection. When a passenger is picked up, the TNC’s policy is the primary policy until the end of the ride. Each insurance company has a different approach to claims from TNC drivers, as this is a relatively new type of risk


When in doubt, always check your personal auto insurance policy to see whether it covers driving for hire, especially if you’re currently driving for Uber, Lyft, or another TNC. Feel free to give us a call. We’re happy to review your policy and discuss your options.

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