The California Assembly and Senate recently passed legislation regarding new insurance requirements for ride-sharing businesses in the state. Liability for car accident injury when drivers connected to one of these new businesses are involved has been murky thus far.
The focus of the bill is to protect consumers and drivers while not unduly harming businesses like Uber and Lyft as they work through their growing pains. Ride-sharing works like this: Folks needing a ride utilize a smartphone application to connect with an available driver. Payment is made directly to the driver, who is connected to the company, but treated as an independent contractor according to business models.
The question of liability in the event of a car crash is understandable. While drivers are subject to a company’s review of their driving record, personal insurance covers them when behind the wheel. One of the gray areas has been coverage when a connection is made, but before the passenger is in the vehicle.
Regulators hope to establish more clear-cut answers to liability questions through this legislation. Companies will be required to carry a $1 million commercial insurance policy that will cover a passenger until he or she exits the car.
The most relevant piece of the compromise may be the reduction in insurance required for the time between when a driver’s app is turned on and a connection is made. This is down from $750,000 to $200,000 in coverage. Drivers must personally carry this and other incremental liability amounts in addition to the company coverage.
Passengers and pedestrians likely don’t think much about whose insurance covers what when they are out and about in California. But in the unfortunate event of an accident, this information can be very relevant to their recoveries. When faced with medical expenses, lost wages or other needs, seeking compensation from insurance companies can be a daunting task. While a skillful approach by an experienced representative can be successful in attaining a settlement or prevailing in court, the process may be less stressful on victims when insurers are clearly defined.
Source: Fox & Hounds, “Uber, Lyft Compromise on Ridesharing Regulations” John Hrabe, Aug. 29, 2014