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What’s Important to Know About Rideshare Insurance in Seattle

By Hardwick & Pendergast, P.S. on July 26, 2019

When rideshare companies like Lyft and Uber burst on the scene several years ago, they added muscle to what’s been called the “on-demand” or “gig” economy. However, from the very beginning, there have been numerous concerns regarding rideshare companies, their drivers, and liability.

Because rideshare companies identify as “technology companies” as opposed to “transportation companies,” and because their drivers are “independent contractors” as opposed to “employees,” there are a number of gray areas in who can be held liable in the case of a rideshare accident.

Both Uber and Lyft have long touted their $1 million liability policies that are supposed to cover drivers, passengers, other motorists, pedestrians, or bicyclists. However, the truth about this coverage is not so clear-cut. To explain the intricacies of how Uber and Lyft’s insurance policies work, let’s break down a typical rideshare trip.

  • Phase 1: The driver does not have his Uber or Lyft app turned on. If an accident occurs during this period, the driver’s personal auto insurance policy is in effect.
  • Phase 2: The driver has his Lyft or Uber (or both) app turned on, but has not received or accepted a ride request. When an accident occurs during phase 2, the driver’s personal auto insurance policy is in effect.
  • Phase 3: Once the driver accepts a ride request, the rideshare company’s insurance policy will take over. This policy is in effect while the driver is on his way to pick up a passenger, and while he is transporting the passenger. The rideshare company’s insurance coverage ends when the rider is dropped off and the driver ends the ride.

While that may sound like adequate coverage on the surface, other factors can prove problematic when you’re injured in a rideshare accident. Both Uber and Lyft require that their drivers carry, at least, the minimum amount of auto liability insurance required by their state. In Washington State, that’s:

  • $25,000 for bodily injury or death of one person in any single accident.
  • $50,000 for bodily injury or death of multiple people in any single accident.
  • $10,000 for property damage coverage in any single accident.

If you’re injured as a pedestrian, bicyclist, or other motorist while the rideshare driver is in phase 1 or phase 2, Lyft or Uber’s insurance won’t cover your losses. If the driver is only carrying the minimal coverage, it may not be enough to cover your medical bills, lost wages, pain and suffering, etc. Furthermore, most personal auto insurance policies stipulate that a driver cannot use his personal vehicle for commercial purposes. If an insurance company finds out that a driver was using his or her personal vehicle to drive for Uber or Lyft (making money, therefore a commercial purpose), they may be able to deny coverage and cancel the driver’s policy.

As you can see, liability in a rideshare accident can be complicated; and insurance companies will look for any loophole they can find to reduce or deny you compensation. Because of the gray areas in rideshare insurance coverage, it is recommended that you contact an experienced auto accident attorney following an Lyft or Uber accident.

For over four decades, the seasoned legal team at Hardwick & Pendergast, P.S., has provided first-class representation for car accident victims in Seattle. Call (888) 228-3860 for a free case evaluation.

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