Uber Frustrating: Rideshares Eliminate Coverage for Drivers and Occupants

Call it what you will – a coverage tragedy, a series of unfortunate events, or a situation that can be expressed with a sequence of four-letter words unfit for publication.  Informing your injured client that there is no coverage for their car accident is an unsavory task.  If your client is a driver or passenger in a rideshare vehicle, and the at-fault party is uninsured, you may be having that conversation very soon.

Brief History of Coverage in Rideshare Accident Cases

Injury cases involving rideshare vehicles were once a safe bet for plaintiff’s attorneys.  If your client was an injured passenger or driver, they are considered full tort regardless of tort election; and, there was plenty of coverage to go around. 

Rideshare companies are required to carry $1 million in bodily injury coverage and were initially carrying the same in UM/UIM.  The companies eroded that coverage over time and are now beginning to reject it outright.  

Wait, Can They do That?

Rideshare companies are mandated to provide certain types of insurance coverage for their drivers, but UM/UIM is not one of them.  

UM/UIM coverage must be properly waived.  The waiver language prescribed by the MVFRL seems clear the insured individual must themselves acknowledge they have the right to UM/UIM coverage, and that they specifically waive that right (on behalf of themselves as well as relatives with whom they live) in exchange for a lower premium.  Despite this seemingly clear waiver language, courts have held such coverage can be waived by an employer on behalf of an employee; further, they not required to inform their employee of their decision to expose the employee to financial risk and waive UM/UIM coverage on their behalf.

Historically, rideshare companies resisted engaging this cost-centric tactic, perhaps because they have always been hesitant to consider themselves “employers.”

At their outset, Uber and other rideshare companies cleverly avoided certain regulations nationwide, arguing they were not traditional taxi services.  They also avoided considering themselves employers; rather, they claim to act as a mere middleman between driver and passenger.  With the huge increase in the number of drivers on the road who are “on app” with a rideshare company, Lyft boldly waived UM/UIM coverage on behalf of their drivers in 2020.  While rideshare companies refuse to provide health insurance or workers’ compensation for their drivers, they are certainly happy to embrace this aspect of the employment relationship considering the massive savings they appreciate as a result.

The Impact on Plaintiffs

Drivers with UM and UIM coverage under personal policies tend to be under the impression that they have “full coverage,” and are often enraged to find out their own insurance company excludes them – and their passengers – during “on app” time.  This means all occupants are rendered financially vulnerable if injured by a tortfeasor with no insurance.  Uber Eats has also waived UM/UIM coverage, so the issue is not confined to drivers delivering people.

Folks without a car (and/or car insurance) rely on rideshare services if they lack access to reliable public transport.  Lyft’s decision to waive UM/UIM coverage is particularly damaging for these passengers.  Outside of the rideshare context, there are similar disputes involving buses that are complicated by governmental immunity; but, even in those instances, there has been at least some path to recovery.  Where the bus company does not provide UM/UIM coverage, Pennsylvania appellate courts have required public transit authorities to provide $15,000/$30,000 in UM.

The Impact on the Judicial System

There are collateral consequences to rideshare companies waiving UM/UIM coverage on behalf of drivers and their passengers.  Rideshare passengers injured by an uninsured tortfeasor will realize there is no path of recovery via a UM claim through the rideshare company’s insurer.  Those passengers may make thinly-supported claims against the driver themselves since they have no other place to turn for recovery.  An influx of very tenuous liability claims against Uber and Lyft drivers solely to trigger liability coverage would negatively impact the integrity and economy of the judicial system.

Do Rideshare Drivers and Passengers Have a Remedy?

Drivers can purchase additional rideshare insurance through their personal insurance company.  They need to be sure that this “rideshare rider” includes UM/UIM coverage and does not simply provide umbrella-type liability coverage.  If the driver is already injured, the answer is far more complicated.  Civil fraud lawsuits have been filed against Lyft for waiving UM/UIM coverage without consent of the driver, but those matters are still in litigation.

Given the way the legislation is currently written, the only reliable way to close this loop in the law is through legislative efforts to require rideshare companies such as Uber and Lyft to provide UM/UIM coverage; or, at the very least, force them to explicitly disclose to their drivers and passengers that UM/UIM coverage is being rejected, and provide the driver and/or passenger the option to purchase it. Challenges to the validity of other corporate waivers of UM/UIM have not been generally successful in Pennsylvania courts.

Your Legal Options After a Rideshare Accident in Pennsylvania

The increased popularity of rideshare apps and the decline in coverage are making this once convenient service into a complicated insurance situation. Will this change in law and precedent change the way that consumers use these apps? Will consumers be forces to spend astronomical amounts on their own insurance policies to cover the gaps? If you’ve been in a rideshare accident and are severely injured, getting compensation may not be a straightforward process. Contact an attorney who has experience in rideshare accidents and keeps up with these changes in law.