Ridesharing services like Uber and Lyft that operate in New Jersey offer a quick, convenient, affordable alternative to traditional transportation services like taxis and limos. Simply by activating a button on your mobile phone, you can arrange to be picked up whenever and wherever you specify.
But, while the convenience of ridesharing has revolutionized the way we approach travel, many riders have given little, if any, thought as to what the ridesharing company’s obligations are to you as a passenger.
For example, what happens if you are injured during an accident involving your ridesharing driver? Who covers your medical bills, lost wages, and other expenses as a result of the accident?
Hal Soden, Jr., risk management expert at Oliver L.E. Soden Agency, a Trusted Choice independent insurance agent out of Jamesburg explains. “If your driver is at fault for the accident, technically his or her insurance is supposed to cover your damages. However, most rideshare drivers only have a personal auto policy, which is limited to using a vehicle for private purposes. Most personal policies contain language denying coverage when the vehicle is being used commercially — as in transporting rideshare passengers for a fee.”
“Only a commercial auto policy — the type that taxi and limousine drivers are legally required to have — provides coverage when a vehicle is being used to transport paying passengers,” said Soden. Commercial auto insurance can cost between $3,000 to $8,000 more each year, which is why most rideshare drivers forgo it. Even drivers who are commercially insured through their regular employer and drive for Lyft or Uber on the side, may find that coverage is limited only to when they are working for their regular employer.
New Laws Protect Ridesharing Passengers
In the early days of ridesharing, if a passenger was injured in an accident caused by their driver, there was no assurance that anyone — the driver or the owner of the ridesharing company — could be held legally responsible for medical and other expenses.
In 2017, in an attempt to address this insurance issue, New Jersey passed The Transportation Network Company (TNC) Safety and Regulatory Act, which applies to any business registered or operating in the state that uses a digital network to connect a TNC rider to a TNC driver to provide a prearranged ride.
Under the TNC law, passengers injured in an accident caused by their rideshare driver will be covered for up to $1.5 million in medical and other expenses to be paid either by the driver’s insurance, the company’s insurance, or a combination of both.
Additionally, in a situation where a passenger is injured in an accident caused by the other driver, the law allows rideshare passengers to seek compensation from the at-fault motorist's auto insurance without restrictions that otherwise limit an injured victim's ability to sue for damages under New Jersey's no-fault laws. In the event the other driver is uninsured, or has insufficient liability coverage to compensate the injured passenger, the ridesharing company is required to carry a $1 million uninsured/underinsured motorist policy as backup.
These insurance requirements are “a positive step toward protecting passengers,” said Soden, who regularly uses rideshares. The legal wrangling among insurers over liability for the accident can delay payments to injured passengers and, while $1.5 million may cover an injured rideshare passenger’s expenses in a typical accident, Soden observed that it may not be sufficient in a worst-case scenario such as a fatality or serious long-term disability that could prevent someone from going back to work and supporting their family.
Consult a Local Independent Insurance Agent
Independent insurance agents like Hal Soden, Jr., can answer questions about ridesharing if you need protection as a driver, or your coverage protections as a passenger. They work with multiple insurers which gives them insight into coverage terms and protections and are up to date on all the latest laws. Independent agents are also a great resource for all your personal and business insurance questions and can offer local insights that the larger companies can’t.