Between the Lines

A Discussion of Case Law and Statutory Law Affecting Commercial Lines of Insurance


Uber, Distracted Driving and Insurance Gaps

Insurance coverage gaps for ride sharing

It’s hard to figure out insurance coverage
when you’re busy disrupting.

A simmering debate over insurance coverage for ride-sharing exploded when a driver, allegedly distracted by searching for a fare on the Uber app, hit and killed a six-year-old in a San Francisco cross-walk on New Year’s Eve. The tragedy exposed a complex battle between popular new ride-sharing startups, drivers and insurance carriers about how to insure drivers who use their personal cars in a taxi-like fashion.

Most personal auto policies don’t cover the use of your car as a “public or livery conveyance.” Ride-sharing services may provide commercial auto coverage for drivers from the time they have a fare (California already requires this). But personal auto carriers argue that their exclusion applies while the driver has the ride-sharing app on and is looking for a fare. As a result, there may be a gap in coverage from the time the driver turns on the ride-sharing app to the time he finds a fare.

In response to the debate ignited by the six-year-old’s death, a bill has been moving through the California legislature. It would close the gap by requiring ride-sharing services to provide primary coverage for drivers from the moment they turn on the app. Uber has implemented some supplemental coverage for this gap period, but is opposed to a requirement that that coverage be primary. Uber and other ride-sharing services argue that this would encourage drivers to turn on their apps not to look for fares, but to access the coverage.

Other states also are grappling with the issue. Earlier this summer, the Division of Insurance here in Massachusetts issued a consumer alert, warning drivers and riders about potential gaps in insurance coverage for car-sharing and ride-sharing activities. Presumably, the insurance industry will eventually catch up with the innovation economy, with or without the assistance of state regulators. A more difficult problem may be reconciling the popularity of ride-sharing apps (not to mention parking space-sharing apps which, so far as I can tell, are not providing users with any insurance coverage) with state laws prohibiting distracted driving.

It’s scary out there. But just wait. Soon we’ll have self-driving cars.

About the Author

Harvey Nosowitz – Counsel

Harvey helps clients with commercial litigation, in particular insurance coverage, personal injury and products liability cases.

Please contact him with any questions:
(617) 621-6555.

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