In many cities, Uber and Lyft are wildly popular alternatives to traditional taxi services. These companies employ drivers who work as independent contractors and who use their personal cars to transport fares that are arranged through smartphone applications. A passenger requests a pick-up, and the application matches an available driver, who retrieves the passenger for a quoted fare and delivers him/her to the desired destination. Payment and billing is handled via the app, not in the vehicle.
Along with the novelty of the rideshare concept comes novel issues related to liability for a car accident involving an Uber or Lyft vehicle. Whose insurance will apply to injuries and other losses stemming from the accident? Can you file a lawsuit directly against Uber or Lyft after a crash involving one of their drivers? In this article, we'll answer these questions and a few more.
Uber and Lyft Drivers are Independent Contractors
If you're in a car accident with an Uber or Lyft driver, suing the ride-share company directly is probably not an option. This is because Uber and Lyft drivers are independent contractors, which means they are not employed by Uber or Lyft, but work as independent third parties.
In general, while employers can be vicariously liable for the actions of their employees, companies are not responsible for the wrongful or negligent actions of their independent contractors. The argument here is that, while Uber and Lyft provide their drivers with a smartphone application to help locate passengers, the drivers use their own vehicles and set their own schedules, work conditions, etc.
Because ride-share drivers are independent contractors, ride-share companies like Uber and Lyft have limited legal liability when it comes to their drivers’ actions, so you'll have a tough time suing Uber or Lyft after a car accident. But that doesn't mean these companies can't be held financially responsible (through their insurance coverage) for injuries and other damages after a crash involving one of their drivers.
Uber, Lyft, and Car Insurance Considerations
Ride-share companies require all of their drivers to have their own car insurance coverage, and both companies will supplement that insurance and provide additional coverage for accidents when the driver is available for a fare via the app, or is actively transporting a ride-share passenger. This is particularly important since most personal insurance carriers will deny or disclaim coverage if the accident occurred while the insured person was "driving for hire" using the covered vehicle.
In general, ride-share companies follow a three-tiered approach when it comes to insurance coverage for drivers:
The first tier consists of the driver’s personal insurance, which covers the driver when he/she is not available to pick up passengers and is not in any way acting in a ride-share capacity.
The second tier applies when the driver is available for a fare but not currently transporting a passenger. In such a case, the driver may still be covered by his/her own insurance, but if that personal insurance is unavailable, the company's supplemental or contingent liability coverage kicks in in the event of an accident. Specifically, if the Uber/Lyft driver causes a car accident during this period (he or she is available for fares via the app, but not on the way to pick up a passenger), then the company's coverage may be the primary source of recovery for anyone injured in an accident involving the Uber/Lyft vehicle.
The third tier of insurance applies when the driver is transporting a ride-share passenger. In this situation, both Uber and Lyft provide at least $1 million in liability coverage for their drivers.
What Damages Can I Recover?
As with any car accident, if you are successful in your claim, you will be entitled to compensation for both your economic (or "special") and non-economic (or "general") damages.
Your economic damages will include any monetary losses you suffered as a result of the accident, such as the cost to replace or repair any damaged property, payment of past and future medical expenses, and compensation for past and future lost wages related to your accident injuries. Your non-economic damages will include compensation for pain and suffering, emotional distress, loss of consortium, and loss of enjoyment of life.
Learn more about what your car accident claim is worth.