With ridesharing services, are you sharing liability, too?

There are just 22 more shopping days until Christmas. It’s hard to believe, but Black Friday and Cyber Monday are over, and we have now officially entered the Winter Holiday Season. For many of us, the next few weeks will be hectic, and between finding just the right gifts and office parties and holiday gatherings with friends, most of us will hit the roads more often and in more of a hurry — or less of a sober state — than usual.

It goes without saying that none of us will drink and drive. We will take advantage of public transit, we will catch a cab, or we will designate a driver. There are plenty of transportation options in San Francisco, including ridesharing — especially since California formally recognized the service (by regulating it) in September 2013.

The thing is, accidents still happen. We try to reduce the risk to ourselves and others, but accidents happen. By choosing to take a cab or a bus, we transfer the risk to the taxi company or the city. Using a ridesharing service should work the same way, right?

Unfortunately, it isn’t that straightforward. One of the main points of contention between the cab industry and “transportation network company” services like Uber and Lyft has been insurance coverage.

According to the San Francisco Cab Drivers Association, authorized taxis in the city must carry livery insurance that has a minimum $1 million limit per incident. The insurance must be in force 100 percent of the time. The city also requires workers’ compensation insurance for drivers.

Before TNC services were regulated, the companies did not have to carry any commercial auto insurance. In an accident, then, the TNC driver would be on the hook for damages for any injuries or, worse, fatalities.

Except that the driver would have been using the car for a business purpose, and personal auto policies don’t usually cover business use. That could leave the passengers on the hook for their own losses.

And that doesn’t really make sense, so the state tried to fix it. We’ll explain how in the next week or so.

Sources:

Forbes, “Lyft’s First Fatality: Passenger Dies In Crash Near Sacramento,” Ellen Huet, Nov. 2, 2014

San Francisco Cab Driver Association, “Insurance? We don’t need no stinkin’ insurance!” Barry Korengold, Aug. 12, 2014