Normally, when you have a car accident with another driver, you can file a lawsuit against the other driver. However, when that driver is on the road as part of the scope of their employment, you have the right to sue the driver’s employer so long as the driver was acting within the scope of their employment. However, the rise of ridesharing services has turned that usual calculus on its head. The way that services such as Uber and Lyft operate makes it difficult to sue the ridesharing company, depending on the state in which the accident occurs.
Ridesharing Drivers are Self-Employed
The reason why there are different considerations is that ridesharing companies do not technically employ their drivers. Instead, all of their drivers are classified as independent contractors. This term means that the driver is in a contract with the ridesharing company, but not as an employee. Instead, they provide their services in exchange for money with no employment relationship. The drivers are self-employed and simply do work for the company as opposed to working for the company. It is an employment relationship that usually makes the employer responsible for any actions of the employee. When this relationship does not exist, the drivers are responsible for themselves. By structuring their arrangement this way, the ridesharing companies avoid any liability for accidents. Essentially, it represents the best of all worlds for companies such as Uber and Lyft. Basically, it is extremely difficult to sue these companies for something that the driver did.
This does not mean that anyone who is in an accident with a ridesharing driver or is hurt while in a rideshare is without any kind of recourse. However, it is the driver who is personally liable for their own actions and not the ridesharing company. As part of their contract with Uber or Lyft, drivers may be required to carry insurance for accidents.
What Role Do Insurance Companies Have?
In most cases, when someone is driving for Uber or Lyft, they cannot rely on their own personal auto insurance policy to cover them in the event of an accident. Instead, ridesharing drivers either need special insurance or a rider on their existing policy to cover their ridesharing driving. In fact, Uber requires its drivers to carry this insurance before they can drive for the company.
The ridesharing companies will also have their own supplemental insurance in case the driver does not have enough insurance to cover the claim. These policies generally have up to $1 million in coverage.
This means that there is a limit to how much compensation an injured party can recover if they are in a rideshare accident. For example, if the driver was grossly negligent, the accident victim can only recover the amount of the insurance coverage and not beyond that. While there may be a judgment that exceeds the amount of insurance coverage, that will be a judgment against the driver instead of Uber. Accident victims cannot go to ridesharing companies to collect beyond the number of their insurance policies. It is likely that the driver will not have the personal assets to cover the judgment and a large verdict would likely mean they would seek bankruptcy protection.
In other words, accident victims will be out of luck if there is $4 million in damages and the total of the driver’s and the ridesharing company’s insurance policies is $2 million.
Can You File a Lawsuit Against Uber or Lyft?
While it is difficult, some victims have attempted to sue the companies directly for the actions of their drivers. The more egregious the driver’s actions, the better the chance that the victim may recover from the ridesharing company. For example, if the driver harmed the passenger in an intentional act, then there may be some chance that the victim can successfully sue the ridesharing company. This includes instances of sexual assault against passengers. However, it is extremely difficult to overcome the fact that a driver is an independent contractor in order to hold the company liable.
This type of corporate arrangement is very controversial in practice. There has been a large backlash against how ridesharing companies treat their drivers and escape liability for the actions of the contractors. There have been court cases that have challenged the ability of ridesharing companies to continue treating their drivers as independent contractors.
To date, drivers remain independent contractors, and ridesharing companies have simply had to pay drivers more compensation as opposed to assuming legal responsibility for their actions. In addition, some states are considering legislation that would make drivers employees of the companies. Unless drivers were on the company’s payroll as employees, it would be difficult to sue the company itself in the event of an accident.
Compensation in a Ridesharing Accident Lawsuit
Even though the drivers are insured and there is a company insurance policy in place, it does not mean that it is easy to obtain a recovery in an Uber or Lyft accident. A ridesharing company’s insurance policy may still not grant claims made against its insurance. While there is a policy, it is still administered by an insurance company, which means that the insurance may try to take steps to keep an accident victim from fully recovering financially for their damages and injury.
At the same time, there is also the driver’s insurance company to deal with, adding an additional layer of challenges for an accident victim. Insurance companies have been known to use every trick in the book to lower the amount that they have to pay, including tactics that border on the deceptive. They will often try to lowball their settlement offers and take advantage of those who are unaware of the value of their claims. Oftentimes, they will try to deny claims so accident victims are not guaranteed a recovery even if they are not at fault.
Contact Our Ridesharing Accident Lawyers
When dealing with two potential insurance companies with murky legal issues as to the driver’s status, a ridesharing accident attorney is an absolute must. The attorney will have experience in dealing with insurance companies and will be wise to the methods they will use to maximize their profits at the expense of fair compensation for accident victims.
Our car accident lawyers are experienced at standing up to insurance companies and their armies of lawyers in order to make sure that their clients get the compensation that they deserve for their injuries.
- David Goguen, J.D. “I was Hit By an Uber or Lyft Driver — What Now?”, Nolo, https://www.nolo.com/legal-encyclopedia/i-was-hit-by-an-uber-or-lyft-driver-what-now.html. Accessed June 13, 2019.
- Curtis Lee. “I Was Injured While Riding in an Uber or Lyft Vehicle”, Nolo, https://www.nolo.com/legal-encyclopedia/i-was-injured-while-riding-in-an-uber-or-lyft-vehicle.html. Accessed June 13, 2019.