When a driver for UberX was involved in a fatal crash on New Year’s Eve, it raised some basic questions about how insurance works when people are using their own cars as de facto taxis. The company’s initial response, which was to distance itself from the driver because he wasn’t actually driving someone around at the time, confused things further. What responsibilities do Uber, Lyft, and Sidecar have when people using their services are trolling for passengers?
This week both Uber and Lyft said that they expect personal insurance to cover their drivers during these times, but in the event it doesn’t, they said they’d step in. On Thursday, Lyft said it would offer liability insurance any time a driver is seeking passengers through the company’s app. The next day, Uber also said it would provide liability insurance in such situations, while also bolstering the insurance it offers during shared rides themselves.
“Uber is taking this step to eliminate any ambiguity while the insurance industry and state governments update policies and regulations for the new world of ridesharing transportation,” the company wrote in a blog post.
There has been no shortage of ambiguity so far, with fundamental differences in the way ride-sharing companies and insurers see the situation. Insurers insist that anything with a hint of ride-sharing isn’t covered. Esurance, which provides personal auto insurance, recently said that so-called Transportation Network Company (TNC) drivers should purchase commercial insurance from someone else. “In all states except California, we’re unable to offer a standard policy to TNC drivers,” the company wrote in a blog post last month. “And in California, the driver’s standard coverage doesn’t apply during a rideshare trip.”
Travis Kalanick, Uber’s chief executive officer, acknowledges that the answers to the questions about insurance and ride-sharing aren’t completely satisfying, and believes that insurance companies will come up with new products to address the issue soon. But he also challenges insurers’ arguments that ride-sharing isn’t covered by personal insurance policies. “Right now I think insurance companies are taking actions that I don’t think are justifiable,” he says. He says that the personal insurance company for Syed Muzzafar, the driver involved in the New Year’s Eve crash, has agreed to cover costs to the limits of its policy, but wouldn’t say what those are.
Eric Madia, vice president of product for autos at Esurance, says that Uber has made significant progress, particularly while people have passengers in the car. The $50,000 collision policy would cover most crashes, he says, and the addition of $1 million worth of coverage in cases where another driver is at fault but doesn’t have his own insurance is critical. “The one gap during trips are injuries to the driver,” he says. “It’s basically left up to the driver’s health insurance.” (Uber says that most states don’t require such coverage for the driver at fault, and disputes the idea that it would leave a gap otherwise.) Madia also argues that Uber’s insurance is lacking between trips, but his main argument is one often levied at Uber and its competitors: The companies are less than forthcoming about the details of their plans. “When you buy a policy from me,” Madia says, “you get a copy of the contract.”
Ride-sharing companies have been widely criticized for being vague about insurance. Drivers, insurers, and government officials all complain of being kept in the dark. Kalanick says his company is willing to share information with regulators and lawmakers. But officials in Chicago, where ride-sharing companies have faced particularly stiff resistance, have expressed frustration that this isn’t happening. The city council recently subpoenaed the full policies from Uber, Lyft, and Sidecar. The deadline to turn over the information is Friday.