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150 Lower Westfield Road
Holyoke, MA 01040


3Feb. 2015

Uber Cool, But Not Uber Covered

Image source: Underscoopfire.com

The phrase “smart phone” amuses me. Cell phones are used less and less as actual telephones and more as mobile text, email and internet-use enablers.

When was the last time you saw someone under the age of 30 talking on their cell phone?

Whatever you want to do, there must be an app for that.

Lately this phenomenon has extended to hiring a ridesharing service.

Ridesharing, which to some of us might seem like a synonym for carpooling, is actually the new euphemism for app-driven taxi or livery services in many cities.

Ridesharing services such as Uber, Lyft and Sidecar offer the convenience of scheduling a ride via an app on your phone. Make no mistake though – you hire and pay for this service the same way you would a taxicab or livery vehicle (via a credit card on file).

The appeal is strong. If you want a ride, you can schedule it on your phone without making a call and you have no need to deal with a dispatcher like Louis DePalma (Danny DeVito’s character on Taxi).

If you want to earn extra money, you can drive your own car or get help from one of these services to secure a car. All are actively soliciting drivers by touting the ease of earning money, work time flexibility, and driver community support. The hurdles to becoming a driver are fewer and easier to clear than those for an official taxi cab – there is no medallion or special taxi license to procure.

All three services reassure prospective drivers with a $1 million per incident liability policy that they say will cover them in an adverse event.

Stop right there.

That’s where I draw the line. If you are considering driving for one of these services, please know that you may be at risk and that you would probably not have coverage for a claim, especially a large one.

As I mentioned above, ridesharing is not a ride from a friend as the name suggests, but a hired livery service. Massachusetts personal auto insurance policies have exclusions for public or livery conveyance, and would not cover a personal auto in these cases.

There is some chance that the compulsory coverage for Bodily Injury to Others ($20,000 per person, $40,000 per accident) may apply, but that is uncertain. Even if it does apply, those coverages are only valid while you are in Massachusetts. And the minimum coverages would likely be insufficient for a major claim. Optional coverages are excluded.

While the $1 million per incident liability policy may seem like it would have drivers covered, it isn’t always clear-cut when the policy would apply.

On New Year’s Eve 2013 an Uber driver hit and killed a 6-year-old girl in San Francisco. Uber is claiming that while the driver did drive for the company, it is not liable because he was not providing services at the time of the accident. The plaintiff’s lawyer disputes that notion as the driver had recently dropped a passenger off and as Uber requires its drivers to be listed to help potential riders see what rides are available.

The bottom line is that if you drive for one of these ridesharing services, you may be left in the cold with a claim that neither your personal auto insurance nor the promised company liability policy would cover.

Right now it appears that none of these services have arrived in the Pioneer Valley, but are present in dozens of cities worldwide. Beware of using them when you travel and think twice before signing on when they reach us.

Please call or email if you have any questions about your auto insurance policy.


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