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SALT LAKE CITY — Before you join up with the quickly growing ride-sharing business in Utah, you should check your car insurance policy, insurance experts warn.
State agencies say ride-sharing companies are dangerous because their insurance policies aren't regulated and can financially ruin a person in an accident.
Ride-sharing companies like Lyft and Uber work through apps and you can sign up to be a driver or a fee-paying passenger. But Tracy Klausmeier with Utah’s Insurance Department says there’s a gap in private insurance coverage, and you may not be covered when you are riding in one of the Lyft or Uber cars. And in the case of a collision or crash, you may be left with a large bill.
“Before you get in the car, check to see if they have coverage,” Klausmeier said. “When you are driving for these companies (like Lyft and Uber), talk to your agent to find out if you are covered.”
Klausmeier says you’d better believe each insurance company will try to get out of a claim. Taxi drivers and bus drivers pay for full coverage, and this issue with the newer ride-sharing may end up being argued in the courtroom, she says. Drivers of ride-sharing cars are considered private taxis by law. Most ride-sharing companies have insurance policies for their drivers, but new lawsuits are testing the limits of these policies.
“The driver has a policy through the company they work for, but it is grey as to when that policy starts,” Klausmeier said. “Does it start when they turn on the app, or does it start when they pick up the passenger?”
California is currently looking at new insurance legislation after a women injured in a crash in San Francisco last summer sued Uber and the driver of the ride-sharing car. Uber has a policy to insure its drivers.
"From the time a driver accepts a trip request through our app until the completion of the ride, our partners have $1 million of coverage for driver liability,” a statement on Uber's website reads. “We were also the first ridesharing request service to include $1 million of coverage for uninsured/underinsured motorists, meaning that passengers and drivers are also covered for injuries when another party is at fault and lacks sufficient insurance.”
But Uber is disputing the claim made by Claire Farhbach, the woman who was injured when the car driven by an Uber driver crashed. The car collided with another car and a fire hydrant went flying through the air and struck Fahrbach, Foxnews.com reported.
I work for a limo company, I'm fully insured, the car is fully insured, but Uber takes absolutely no responsibility for its drivers. (Uber) holds their customers in really high regard, but they don't hold their drivers in any regard.
–Anonymous ride-sharing driver
It's unclear if Uber will step up and just pay for Farhbach's medical bills or if the driver will have to pay for it all. Uber says it is not liable because it defines its relationships with the drivers as “partners,” not employees, Sfbg.com said.
Critics are calling out Uber for what they call shady insurance practices. A ride-sharing driver wrote a letter to Sfbg.com and said Uber drivers are basically "self-employed cabbies who are often under-insured."
"I work for a limo company, I’m fully insured, the car is fully insured, but Uber takes absolutely no responsibility for its drivers,” the driver, identified as “Zark,” wrote in a letter to Sfgb.com. “(Uber) holds their customers in really high regard, but they don’t hold their drivers in any regard.”
The San Francisco-based personal injury firm of Bostwick & Peterson also called it a bad insurance policy and said Uber should take responsiblity for its drivers.
“Uber is trying to distance itself from any liability, instead calling itself a 'modern day phone book' of drivers that simply connect people but has no responsibility when accidents occur,” Bostwick & Peterson stated in a message on its website, according to Foxnews.com. “However, because Uber does connect people, legal analysts assert that it should be treated more like a taxi company and be held responsible for risks Uber creates.”
Your private insurance may not cover you being in the car while it's considered a private taxi, either. Klausmeier has some advice for those who still want to participate in ride-sharing.
“What the passengers need to know is they need to verify that the driver has coverage, and when the coverage kicks in,” she said.
Utah joins 12 other states that are warning consumers against ride-sharing companies.
