States Warn About the Use of Rideshare Companies and What It Can Mean to a Passenger’s Insurance Coverage in Case of a Car Accident.

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Fourteen states, the most recent being New Jersey, have issued warnings that there are risks when choosing to use a ridesharing company, a type of membership cab company. The most well-known ridesharing companies include Uber, Lyft and Sidecar.

It is undeniable that these car companies make it easier for their users to access a driver who will take them to their intended destinations for a reasonable price; however, this does not come without some risks. States are warning their citizens that these companies may not be properly covered by auto insurance should a passenger be involved in a car accident. Although these companies deny it, there seems to be evidence supporting what the states are saying.

An example of individuals who were involved in a car accident while using a ridesharing company, and had insurance problems, is Jason Herrera and his co-worker, Nikolas Kolintzas. They were passengers while using the service “UberX” during a business conference in San Francisco, California. They had used “Uber Black” in the past, a similar service from the same company, with the difference being that the latter company provides a chauffeur in a black sedan. Herrera and Kolintzas explain that they chose to try the new and cheaper service UberX because they had used the company’s services in the past and felt familiar with the company.

During a business trip on September 25, 2013, however, Herrera and Kolintzas got into a car accident while using the service and sustained major injuries. Herrera was left unconscious in the back seat of the car, bleeding from his head and mouth, and Kolintzas presumed him to be dead. This car accident left both passengers with unpaid medical expenses due to the nature of the insurance coverage provided by the car service. They were told by Uber that they needed to contact the driver’s insurance company in order to get their bills paid; however, the insurance company for the driver denied coverage based on the fact that the driver had been riding “for profit.” Under the auto policy, there was an exclusion for accidents arising during “for profit” transportation. Moreover, Uber X did not have its own auto insurance for the vehicle. This was, in part, because drivers were allowed to use their own personal insurance.

States are not the only ones speaking out against these companies regarding insurance. Taxi companies have been complaining about them long before the states came on board. While it is difficult to come up with an immediate solution to the problem of inadequate insurance coverage by these companies, California, Colorado and Illinois are considering laws that could positively affect the situation. Unfortunately, these bills have not yet been enacted and are all awaiting passage and signatures.

The companies counter by saying that they have additional policies that will cover the passengers in case the drivers’ insurance policies do not. Uber maintains that there is no insurance gap that will hurt their users in case of a car accident, and that this has been their practice since the creation of their company. But it has been advised by the Insurance Information Institute that riders ask, prior to using these services, about the extent of their auto coverage. And despite their experience, Herrera and Kolintzas continue to use Uber Black since they have been assured that their drivers have commercial insurance, which would offer them coverage in the event of an accident.

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