Uber is a popular ridesharing company that has gained popularity throughout the United States, including Michigan. The company uses a smartphone application (app) to connect users with a Uber driver. The app allows users to order a ride and facilitate a pick up destination.
Uber is very similar to a taxi service, except instead of hailing a taxi or calling a taxi dispatching service, the user simply presses a few buttons on a smartphone to order a ride.
Uber drivers typically own and operate their own vehicles. They are independent contractors and not employees of Uber, Inc. Uber drivers are required to carry auto insurance under Michigan law.
However, unlike a taxi service, Uber provides much smaller insurance protection for its passengers and liability coverage for other motorists on the road. The difference in insurance protection between Uber and more traditional ride sharing companies has caused a lot of controversy in Michigan and other states.
Uber’s insurance coverage is split up into different tiers, or stages. The first stage is when the Uber driver has turned on the Uber app and is available to pick up passengers using Uber’s network. The second stage is when the driver is en route to pick up a passenger and the third stage is when the driver has picked up the passenger.
For the latter two stages, Uber covers its drivers with a $1,000,000 commercial policy per incident. This includes liability for Uber drivers, as well as uninsured and underinsured motorist coverage for Uber passengers.
However, this insurance only kicks in when a potential passenger accepts a trip. Before a passenger orders a trip using the Uber network, Uber only covers drivers with a $50,000 liability policy per person and $100,000 per accident. This coverage is secondary to the driver’s own personal auto insurance coverage.
This liability coverage is very low, especially when compared to taxi companies that usually offer a commercial policy for an entire fleet. What is also very concerning is that most car insurance carriers do not provide personal coverage for Uber drivers while they are driving for Uber. This is because most car insurance carriers specifically exclude coverage for accidents that occur while the driver is driving for pay or for hire.
So in reality, before a Uber driver has been hired through the company’s wireless network, most Uber drivers are essentially driving uninsured on Michigan roads unless they carry supplemental car insurance. Unsurprisingly, most Uber drivers don’t purchase supplemental insurance. This is a scary proposition for motorists and pedestrian throughout Michigan.
But why should Uber only be responsible for protecting the public at the higher liability amount once a prospective user orders a ride? In between fares, Uber drivers are still operating their vehicles, monitoring their smartphones and computer screens for new riders.
One could even argue that drivers are most dangerous during this time, while the driver is not occupied with transporting a rider to his or her destination.
It is my opinion that liability coverage should extend from the time Uber drivers activate their apps to accept Uber passengers until the time they cease providing rides for the service that day.
The Michigan legislature is looking to address this problem, and I’ll discuss a recent proposal in my next blog.
