People getting ready to hire an Uber ride should probably be aware of some big changes in insurance for the Uber drivers. The reason for the change dates back to a California incident in 2013.
On New Year’s Eve of that year, a driver for UberX (the service in which drivers use their own vehicles) ran into a family in a crosswalk in San Francisco. A 6-year-old girl was killed, and her parents and brother were seriously injured.
When insurance claims were made, Uber said that the driver was not covered by its insurance because he hadn’t actually accepted a fare, and had no passenger in the car. Therefore, the company says, at the time of the accident, the driver was technically not working for Uber. This phase is referred to as Period 1 – the time during which a driver is logged into the app, but hasn’t booked or picked up a passenger yet.
The law has now changed requiring Uber to provide primary third-party liability insurance covering the costs of injury, death and property damage to third parties during Period 1. Additionally, the law requires Uber to maintain $200,000 of excess liability to cover cases of particularly bad accidents. In other words, Uber is now liable from the time their drivers open their apps to the time they close them. Additionally, the new law prohibits the drivers from using their personal insurance for their private vehicles during Period 1, but they can purchase a new kind of personal insurance policy that allows for ride-hailing work. Unfortunately, although many drivers like the idea, few have already made the purchase. These policies kick in before company policies do during Period 1 accidents, so Uber would love it if their drivers would buy them, which would get Uber off the financial hook.
California was the first state to pass new legislation regarding Uber. They passed law AB 2293 which guarantees liability coverage for third parties during Period 1 - $50,000 per bodily injury for one injured individual, $100,000 total for bodily injury, and $30,000 for property damage.
Based on the California law, new legislation is going into effect in 19 states. As good as the news is, it is important to remember that the law only covers liability, and does not cover collision or other damages to the driver’s car. Also, the new coverage does not cover the drivers if they are in an accident that is their fault. It only covers bodily injury to passengers and others. However, a new special insurance policy covering the Period 1 stage is available for Uber drivers. It explicitly allows for work on Uber, and agrees to cover accidents during Period 1 as well as personal driving time.
What remains unclear at this infancy stage of the new law is what happens if a driver who has several apps on is in an accident during Period 1. There is a collision gap. Uber drivers won’t be able to fix their cars under Uber’s liability policy since a ride-hail policy had already covered part of the claim, and a driver would have the claim denied.
It really is important for drivers to consider the ride-hail policy mentioned above for Period 1. The policies are available through Farmers Insurance or Metromile. But, many of the drivers are just hoping that their insurance companies don’t find out that they are a rideshare driver. They lie to their insurance carriers about their work, and this leads to confusion, and in some cases, insurance fraud. In other words, adopting the “don’t-ask-don’t-tell” strategy only works until there’s a crash. Several personal insurers who don’t want to cover commercial activity are cancelling their drivers’ policies if they’re discovered.
At this point, nothing has changed for drivers once a trip is accepted. The commercial auto insurance policies that Uber maintains cover $1 million for third-party bodily injury and property damage for each accident, $1 million of uninsured/underinsured motorist bodily injury coverage per accident, and contingent comprehensive and collision insurance which will provide protection against physical damage to the driver’s vehicle while on a trip. It covers up to the vehicle’s cash value, after a $1,000 deductible.
The new laws are good, but it will take a while to determine how good they are.