Driving for Uber or Lyft – We have the Insurance you Need.

Technology is a great thing and I love that we live in a country where people are rewarded for “Building a better mouse trap;” and in some real ways Uber, Lyft and Sidecar are “Better-Mousetraps,” – they also expose drivers to great financial risks when driving without uber or lyft insurance.

On New Year’s Eve, Sofia Liu age 6 was killed and her mother and brother seriously injured as they crossed a street, by a Uber driver.  The girl’s parents have brought a wrongful death suit against Uber Technologies.  But Uber has declined responsibility because it claims the driver did not have a passenger in the car at the time of the accident. The lawyers for the parents insist Uber is liable because he had just dropped off a passenger and was “distracted by the app he used to look for new fares.” I’m not a lawyer, but it is clear that these new services are requiring the courts to fit possibly dated laws to a set of changing risks.  This can leave drivers for these services in legal limbo.

Uber states Drivers must have personal auto insurance on their car, and that Uber carries $1,000,000 policy to protect passengers. I have heard passengers and drivers alike that quote that one million dollar figure as a reason to feel safe. The truth is that the contracts are worded in a way that can leave holes large enough to drive a limo through. First it is vital to understand the auto liability Uber, Lyft or Sidecar have in place is there to protect them and not the owner/drivers. These services expect drivers to show they have car insurance, I have had two drivers this month that ignored my advice to carry commercial insurance, instead switching to a competitor that was happy to sell them private passenger insurance despite knowing the customer planed on acting as a livery service and in the event of a loss could leave the owner of the car in a dreadful mess. Simply put, private passenger policies will not pay for damages arriving out of commercial use. Depending on the situation, Uber “Might” pay for the damage you do to other persons or property, but they will not pay for damage to your own auto. That means if your car is totaled- your out of luck.

The terribly tragic death Sofia Liu, took place in California, which prompted the Department of Insurance in that state, to issue a warning to drivers about the insurance gaps that working for such companies can cause.

“It’s very clear in California: If you drive your car and make money on it, you need a commercial license,” said Pete Moraga, a spokesman for the Insurance Information Network of California. “But because it’s so new, insurers don’t ask the question, which does open the process up to fraud.”

“Uber Chicago” has been getting pressure from all sides, and in resent weeks the calls to require the service to follow the same rules as their old-world competitors face, have steadily grown. When Uber was thought of as a service from Limos, they had the advantage of splitting the limousine industry, since many drivers saw such services as a way to expand their own businesses by using them to put paying customers into their cars when they otherwise would have been empty. There were at the same time, also Limo providers that feared the prospect of too many cars out on the street and taking business away from them, especially during peak days and times. Well if Limo providers were divided; Chicago’s taxicab owners, led by business partners Pat Corrigan and Michael Levine, saw Uber and Lyft as a direct threat.

Uber CEO Travis Kalanick addressed the pressure the Taxi companies are putting on Mayor Rahm Emanuel.
“The technology has made limos viable alternatives to taxis,” and the taxi industry is not used to having an alternative. It’s not used to having to compete. It’s used to going to city officials and lobbying them to protect their business and keep competition out. And that has resulted in poor service in most cities across the country.”

It is difficult to deny that these new players are bringing a service that appeals to many, and this country was built on letting the best idea win; the issue is whether this competition is taking place on a level playing-field? Are these new options not being required to obtain the same liability insurance coverage that are mandatory for Limousines and Taxis? Are the drivers aware they could be leaving them self open to a catastrophic financial loss?

Uber Insurance

At Urban Insurance we always advise customers  “After having a claim is a bad time to find you don’t have the coverage you need.”  That said, I know we loose customers to companies that will sell a customer what they ask for, rather than what they need.  While clearly drivers who carry passengers for money should be covered under a commercial auto policy, I understand the temptation to try to “Get-away” with cheaper auto insurance. I recently read that after reading about holes in his coverage, he asked Geico who told him the only option was commercial insurance, which Geico quoted at $8,000 per year-little wonder people are trying to avoid the proper insurance.

At Urban Insurance we offer a range of commercial auto policies including Limo insurance starting from $159 per month.

By having the correct type an amount of insurance, you are then also able to get the proper plate (LV) and use your vehicle outside of Uber or Lyft whether your vehicles are used for wedding transportation, client parties, airport service, or to and from any event. Urban offers Low-Cost insurance for Limousine companies that have a single car or a large Fleet including stretch SUV limousines and Limo Coaches Urban Insurance can shop multiple companies to find you the coverage you need at the lowest price.

UPDATE 3/26/2014

PCI testified yesterday before the Illinois House Businesses & Occupational Licenses Committee on legislation that would regulate ride sharing in the state.PCI is neutral on Amendment 1 to HB 4075 but offered suggestions that could help address insurance issues raised by ride sharing networks and activities and protect consumers statewide. PCI emphasized the addition of several critical elements: a “bright line rule” for when ride sharing drivers are acting as commercial drivers; that ride sharing companies provide primary insurance coverage; and that there be various disclosures to drivers and ride sharing passengers with respect to insurance coverage. PCI was joined in lobbying the issue from an insurance perspective by the Illinois Insurance Association.Following testimony, the Committee passed Amendment 1 to HB 4075 by a 9-2 vote. The bill now moves to the House floor for continued debate and consideration. PCI remains engaged with key stakeholders and legislative leaders.The Chicago City Council is also considering an ordinance on ride sharing, which is up for a vote next month, but PCI is advocating for a broader, uniform approach to these issues across the state.

We will keep you updated with the newest information we can find on Uber and Lift drivers and insurance.

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