The Uber & Lyft Insurance Trap: Which of the 3 Coverage Phases Were You In?

How does rideshare insurance work in Michigan?

Rideshare insurance depends on the "Phase" of the app at the time of the crash. To secure maximum compensation, an Uber accident lawyer Michigan must identify which of the following three categories applies:

• Phase 1 (Offline): Personal auto insurance applies.
• Phase 2 (Logged In, No Passenger): Limited commercial liability applies (50K/100K)
• Phase 3 (Active Trip): A $1,000,000 commercial policy is triggered under MCL 257.2123.
  Key Tip: Victims are entitled to Michigan No-Fault PIP benefits regardless of the phase, but the liability settlement for pain and suffering changes drastically depending on the driver's app status.

Insurance and Uber rides can be confusing. When these crashes lead to a serious personal injury, it is important to get the right information from an Uber accident lawyer Michigan victims trust. The rideshare accident lawyers at the Lee Steinberg Law Firm have been handling these cases for years. But there is a lot to know about when a car crash involves an Uber ride. There are three phases of insurance coverage in an Uber & Lyft accident. This article explains them.

https://www.youtube.com/watch?v=S5A3sudAICE

The General Rule – Lyft and Uber Drivers Must Have Auto Insurance

First, let’s begin with the general rule. Under MCL 257.2123(1), a “transportation network company driver” must have auto insurance on their personal vehicle, and the insurance must recognize that the Uber or Lyft driver uses the vehicle to transport passengers for compensation.

In other words, all Uber & Lyft drivers must be insured. And this does not mean just auto insurance that covers them while operating their vehicle during non-work hours. In addition, they must have insurance for when they use their car to drive for Uber & Lyft.

When does Uber & Lyft insurance kick in?

The insurance policy that covers the Uber or Lyft driver kicks in as soon as the driver logs into the transportation network company's digital network. This means the driver does not even need a passenger yet. At the moment they log in to accept rides, the driver’s primary auto insurance is for Uber & Lyft.

Do Uber & Lyft Sell Car Insurance?

No. Uber and Lyft do not sell auto insurance. Instead, the driver must purchase not only personal auto insurance, but also insurance for the time they are logged into the network and accepting rides.

Uber and Lyft will help a new driver obtain insurance. A driver should also call their own auto insurance carrier and ask for a “rideshare rider.” Remember, in Michigan personal auto policies do not cover driving for hire, so additional coverage must be purchased while you’re working.

All Uber and Lyft Drivers Must Have PIP Coverage

As part of the auto insurance they purchase, every single Uber or Lyft driver must maintain PIP (personal injury protection) coverage. This coverage covers items like medical bills from a crash, lost wages, replacement services, and household chores. It does not cover car damage.

Personal injury protection covers not only the driver, but also the passengers inside the vehicle if they don’t have their own auto insurance and don’t live with a relative with auto insurance. The minimum amount of medical coverage these policies must carry is $250,000.

Example #1:
An Uber driver is logged into the network but has no passengers. He gets rear-ended by a negligent driver. The Uber driver turns to his own auto insurance for the payment of medical expenses, lost wages, and other no-fault benefits.

Example #2:
The passengers turn to their own auto insurance for payment of medical expenses, lost wages, and no-fault benefits. If they don’t have auto insurance, then the auto insurance of a relative with whom they live must pay the no-fault benefits. If there is no car insurance in the household, then the Uber driver’s auto insurance must pay both passengers’ benefits.

First Coverage Phase – Not Accepting Rides

The first coverage phase I will discuss is when an Uber or Lyft driver is not accepting rides and not logged into the network. In other words, they are using their vehicle for personal reasons. During this time, the driver’s personal auto insurance policy covers the driver in the event of a car crash.

Under Michigan law, the minimum amount of liability coverage a person can purchase is $250,000 per person, or $500,000 per accident. However, if they sign off on documentation approved by the Michigan Department of Financial Services (DIFS), a person can choose a lower bodily injury amount. The minimum bodily injury in Michigan is $50,000 per person or $100,000 per accident.

Remember, “bodily injury” is the coverage to protect you or anyone driving your vehicle if you or another driver causes an accident that leads to personal injury. Bodily injury coverage is money the injured person gets if you are negligent in causing the crash.

Second Coverage Phase – Logged on to Network, No Passengers

The second coverage phase is when an Uber or Lyft driver is logged onto the transportation network but has not yet picked up a passenger. This is the time when the auto insurance for Uber or Lyft kicks in or becomes the primary coverage for the driver. During this time, a driver’s personal auto insurance is not in effect and will never cover you if a crash or collision occurs.

During this phase, the minimum amount of liability coverage an Uber or Lyft driver must purchase is $50,000 per person or $100,000 per accident. MCL 257.2123(2)(a). However, a driver would be smart to purchase more liability insurance, as the minimum amount will not do much to protect you after a crash. The recommended amount of liability coverage is at least $250,000 per person or $500,000 per accident.

Third Coverage Phase – Logged on to the Network, With Passengers

The last coverage phase is when the driver has accepted a ride and picked up passengers. In other words, the passengers are occupants inside the vehicle. At this phase, the minimum amount of combined single bodily injury coverage is $1,000,000.

This means that if an Uber or Lyft driver is negligent in causing a car crash, such as running a red light, rear-ending another vehicle, making an illegal turn, or running a stop sign, the driver's insurance company must pay up to $1,000,000 in pain and suffering compensation.

Remember, this insurance coverage protects the Uber or Lyft driver from their own negligence. If another vehicle causes an accident, then a passenger or Uber rider can make two claims:

• A negligence claim against the at-fault vehicle (bodily injury)
• A claim against the insurance company for the Uber driver (uninsured motorist claim or underinsured motorist claim)

Uninsured Motorist Claims and Uber

If another vehicle causes a crash and the driver and vehicle are uninsured, the Uber driver and her passengers can turn to the Uber driver’s auto insurance for payment of pain and suffering. This is called uninsured motorist coverage.

Uninsured motorist coverage covers the pain and suffering compensation a person injured in a Michigan car accident would have received from the at-fault driver or at-fault vehicle if that driver were insured.

To recover pain and suffering, the injured person must have a “threshold” injury under Michigan law. There are three separate types of threshold injuries. They include (1) death, (2) permanent serious disfigurement, and (3) serious impairment of body function. Most cases involve this last category, serious impairment of body function.

Besides pain and suffering, uninsured motorist benefits also cover medical bills and lost wages not covered by PIP. For example, if the injured person’s PIP coverage is exhausted or used up following a crash, the injured person can turn to his or her uninsured motorist coverage for the payment of medical expenses related to the car accident.

Underinsured Motorist Claims and Uber

Let’s say another vehicle causes a crash while you are riding in an Uber. But that driver doesn’t have enough insurance to cover the injuries he caused. In that case, the driver is considered “underinsured.”

Underinsured motorist coverage is insurance a car owner purchases from their own carrier and provides a way to recover for pain and suffering caused by the negligence of an underinsured driver.

Basically, if you are injured in a car accident and the negligent driver who caused the crash does not have enough car insurance, your own insurance company steps into the shoes of the underinsured driver and pays the pain and suffering.

Uber and Lyft Injury Accident Lawyers in Michigan

The Uber and Lyft car accident lawyers at the Lee Steinberg Law Firm are aggressive in obtaining the benefits and compensation to which clients are entitled. We deal with insurance companies and stop them from bullying you.

We take an individual approach to each case, meeting and working with our clients every step of the way to ensure they are advised and comfortable. We investigate the facts surrounding the accident, hire the necessary experts, meet with physicians, and aggressively fight to ensure our clients obtain justice and the highest possible compensation.The Lee Steinberg Law Firm represents car accident injury victims in Detroit, Warren, Sterling Heights, Pontiac, Ann Arbor, Flint, Saginaw, Lansing, Bay City, Midland, Grand Rapids, Cadillac, Alpena, Traverse City, and other cities and communities in Michigan.