Did you ever wonder whether the driver or owner of a motor vehicle, operating for Uber or Lyft, has sufficient automobile liability insurance to cover you should you suffer injury or damages as a result of their fault?
Uber and Lyft, as well as other like companies, are considered by California law to be transportation network companies (transportation companies that provide prearranged transportation services for compensation using online-enabled applications or online platforms to connect with passengers) regulated by the Public Utilities Commission. You see it all the time. People stand in building doorways and on sidewalks waiting for their Uber or their Lyft. They usually have downloaded the company’s application to their smartphone and then simply clicked for a ride. A private motor vehicle then shows up with an Uber or Lyft emblem and off they go.
In 2015, the California Legislature took steps to better protect passengers as well as others who suffer injury or damages as a result of a transportation network company driver’s negligence. Before 2015, motor vehicle drivers and owners, who allowed their cars to be used for transportation network companies, ran into insurance coverage issues with their personal auto insurance companies. Personal auto insurance companies typically excluded drivers from coverage if the driver was hired to transport a passenger. The Legislature did not want passengers and others unprotected. However, insurance companies did not want to accept such liability and offered additional insurance programs with certain limiting terms and conditions. The Legislature needed to fix the confusion.
The California Legislature believed that liability insurance requirements should depend on whether the passenger was in or out of the car. Specifically, California Public Utilities Code section 5433 requires that transportation network companies carry liability insurance coverage insuring their contracted drivers and vehicle owners for at least $50,000.00 per person and/or $100,000.00 per accident as well as $30,000.00 for property damage. In addition, they are to carry $200,000.00 of excess insurance coverage.
These limits are in place when the driver has logged into the network system and is driving around and waiting to pick up a ride.
Once a driver picks up a passenger, then the transportation network company must retain $1,000,000.00 of primary automobile liability coverage as well as $1,000,000.00 of uninsured/underinsured motorist coverage.
For example, if a pedestrian is injured because a transportation network company driver runs a red light, then the pedestrian should be covered up to $50,000.00 for his or her injuries together with $200,000.00 of excess coverage. If the driver happened to be carrying a passenger, then the pedestrian should be covered up to $1,000,000.00. However, if the passenger was also injured, then the passenger may also make a claim against the $1,000,000.00 of coverage so that both the pedestrian and passenger would share in the $1,000,000.00 limits.
The above insurance limits actually give a passenger much more protection than California currently requires for the operation of other private passenger motor vehicles. After all, currently, California only requires a motor vehicle operator and/or motor vehicle owner to carry $15,000.00 per person/$30,000.00 per accident and $5,000 for property damage. Uninsured and underinsured motorist coverage is not even required.
We do see a day coming when the Legislature will have to abandon the concept of requiring less insurance coverage for drivers and vehicle owners before they pick up a passenger. After all, the driver and/or vehicle owner is in business the moment they log into the network and is ready to accept a ride request. If he or she is conducting business, then why shouldn’t the insurance coverage limits be $1,000,000.00 rather than $250,000.00.? Public protection should always come first.