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Does Your Lyft Driver Have Car Insurance?

Publication Date: 
October 17, 2013
Source: 
Nerd Wallet
Author: 
John Kuo

Lecturer and CIS fellow Bryant Walker Smith weighs in on the liability issues associated with rideshare services like Lyft and Uber with NerdWallet's John Kuo. 

Before hopping into an Uber or becoming a Lyft driver, you might want to ask yourself: What happens if I get in an accident?

As with many fledgling industries, peer-to-peer ride-sharing companies face an uncertain insurance landscape. Insurance coverage for ride-sharing users and drivers depends on state and local regulations. In some states, a driver’s personal auto insurance is voided when his or her car is used when transporting the public. Other states, California for example, have regulations recognizing peer-to-peer ride-sharing companies. California recently began recognizing "ride-hailing firms" as a new category of business called transportation network companies (TNC).

According to Bryant Walker Smith, a fellow at the Stanford’s Center for Internet and Society, the biggest issues ride-sharing companies is not how much insurance they should have, but whether or not they can even purchase insurance.

"The two biggest questions that we face are: Can these peer-to-peer ride sharing companies get insurance? And can the individuals get insurance?" Smith said. "Now there is a state-by-state standard. The trend has been towards greater acceptance by the government and the public. We are still trying to figure how much, exactly, can be shared."

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"Although Lyft and Uber are technically platforms that connect riders with drivers, they still might be liable if their drivers get in accidents," Smith said. "It really depends on the state. There might be some cases where people can say these companies had knowledge or control of their drivers. Are they selecting the drivers? Are they inspecting the cars? Are they screening drivers' history? Does the fact that drivers are constantly referring to their cell phones distract them from the road? We still don’t know how the answers to these questions might affect issues of liability. It's a tough juncture of real-world risk and ongoing innovation. Injury and death can result."