On July 1, 2015, California implemented strict insurance laws governing drivers for ride-hailing services, such as Uber and Lyft. The insurance law attempts to delineate which insurance policies apply when drivers are in the act of working as opposed to driving in their private cars on non-work related time. The legislation was enacted in response to an accident involving an Uber driver on December 31, 2013, which struck and killed a child and injured her mother and brother. At the crux of the conflict was the question of whether the driver was covered by the company’s insurance at the time of the accident. The incident triggers the larger debate as to whether the driver was actually considered to be employed by Uber at the time of the accident.
Uber maintained that during “Period 1”- the time when the driver has the Uber application open, but has not accepted a fare and does not have a passenger in the car- the driver is not working for Uber. The new California law takes the opposite approach. Accordingly, Uber and other ride-hailing service companies are now liable for accidents and damages incurred by third parties from the moment a driver logs into his application to accept rides to the moment he shuts down the application.
The law requires Uber to provide primary third-party liability insurance (covering injury, death and property damage) during this window of time known as Period 1. In addition, in California, ride-hailing service companies must retain excess liability coverage in the amount of $200,000 in the event of particularly costly accidents. To preclude claims by these companies that their insurance policies do not apply during this period because the driver’s personal insurance policy supplies coverage, the law also specifies that a driver’s personal coverage plan is inapplicable during Period 1. Proponents of the legislation applaud these insurance reforms as a positive step in responding to the new and complex questions raised by the proliferation of ride-hailing services.
Technological advancements have generated new issues arising under various insurance and employment laws in California, as well as other states. Shane Coons assists clients with many types of business liability and insurance dispute issues. Contact Shane Coons at 949-333-0900 or visit www.ShaneCoonsLaw.com to schedule a consultation or learn more about the practice.