The Complete Legal Guide for Drivers to Stay Safe and Successful
Thinking about driving for Uber, Lyft, or another rideshare company? There is more to consider than just the extra cash you’ll make. Rideshare drivers need to be aware of the potential legal issues like gaps between your insurance and the company’s policy, what you could be liable for in an accident, and what to do in an emergency situation.
Check out this guide to navigating the law as an Uber or Lyft driver, and stay safe and successful!
Many drivers for Uber, Lyft, and other ridesharing companies could fall into an insurance coverage gap if an accident occurs while they are logged in as a driver. The gap in coverage occurs due to the lack of protection for rideshare drivers within personal automobile policies and because of the secondary nature of the insurance provided by ridesharing companies. It may not be brought to your attention when you sign on to drive for a rideshare company, but their insurance policies only cover certain circumstances. Personal insurance policies often prohibit driving for profit, and thus they will not cover you if you are working as a rideshare driver unless you’ve purchased additional insurance coverage.
This insurance gap means that in the case of an accident, questions and disputes could emerge about who is responsible for paying damages. This situation could delay insurance claims and expose a driver to costly legal battles. Without the proper insurance coverage, a driver might end up responsible for vehicle repairs and medical bills of everyone involved in the accident. To avoid these consequences, be sure to obtain an insurance policy that specifically covers ridesharing work and/or commercial driving.
Many personal car insurance policies give you the option of buying supplemental insurance. Without one of these supplemental policies that specifically grants coverage for commercial driving, you are likely operating under a personal policy that specifically excludes coverage of driving-for-hire work. Be sure to read the fine print of your insurance policy and talk to your insurance agent or an attorney about getting sufficient coverage for your rideshare work.
1. When drivers turn on a rideshare app and are waiting for a pickup request, the rideshare company provides liability coverage for third parties. This pays for property damage and medical bills when a rideshare driver is at fault. When an outside party causes the accident, the rideshare driver could make a claim against the at-fault driver’s insurance.
2. After drivers accept ride requests, they are considered “actively engaged in a job” while traveling to the pickup location and transporting people to destinations. During this period, Uber covers third party liabilities and bodily injury caused by uninsured or underinsured at-fault drivers, including hit-and-run accidents. Contingent collision and comprehensive coverage is also active. Lyft insurance pays for damages in excess of the commercial coverage, if any, carried by drivers.
3. Once drivers shut off the ridesharing app and enter offline mode, they are covered solely by their personal policies.
In some states, Uber drivers have access to driver injury protection policies through Uber’s affiliate Aon. In a qualifying accident, you could receive disability payments up to $500 per week and as much as $1,000,000 could be available for your medical expenses. The policy also includes a survivor benefit up to $150,000 for the driver’s family, in cases of the driver’s death.
The same insurance companies who provide personal coverage have developed products specifically for rideshare drivers. They serve as either extra protection while online with a rideshare network, or as an extension of personal coverage while engaged in driving-for-hire work. Depending on the insurance company and policy, you can expect to pay an extra $10 or $25 per month or an additional 15 to 20% of your existing premiums for this extra coverage. When selecting a policy, evaluate your current coverage, consider your deductibles, and determine how much extra protection you need.
If you want to pursue ridesharing work, you should find out if your state requires a commercial driver’s license to transport passengers. Some states impose commercial licensing on people who perform any ridesharing work, while others only require it of full-time professional drivers. Each state’s department of motor vehicles provides precise information about licensing laws.
If you are a commercial driver who has partnered with Uber, there are particular insurance requirements for you. Drivers in this category must carry a commercial automobile policy that acts as the primary coverage for accidents. This applies to all UberBLACK, UberSUV, UberTAXI, and UberT partners. It also applies to UberX partners and Lyft drivers in some specific places (such as New York City). Uber’s insurance policy may pay for accident expenses in excess of the primary coverage.
When accidents happen, drivers should check to see if their passengers are injured. Call paramedics or emergency services if people are hurt. Drivers, even if they appear uninjured, should visit a doctor as well. Some motor vehicle injuries are not immediately apparent. Rideshare drivers also have a responsibility to document the accident scene by taking pictures on their phones and recording interviews with witnesses. They can also request a copy of the police report. Drivers must inform their insurers about the accident and the companies covering any other vehicles involved. Drivers should likewise inform the ridesharing app company they are driving for as soon as possible.
In most states, rideshare network companies designate their drivers as independent contractors. As an independent contractor, you have no legal rights to a minimum wage, overtime, reimbursement of expenses, or unemployment benefits. Contract law, however, does apply, and in a recent lawsuit, Uber drivers have sued the company for alleged breaches of contract based on shorting drivers’ pay or keeping tips. Other legal actions have challenged the premise that independent contractors have no rights to the reimbursement of expenses or benefits. Prior to driving for a rideshare network company, you should research your state’s laws to see how your state classifies rideshare drivers.
As independent contractors, drivers are solely responsible for their own income taxes. Taxes are not automatically deducted from your paycheck as they are for full-time employees, so you will have to make quarterly tax payments or possibly pay a large chunk of tax when taxes are due annually. Your earnings from driving are reported to the IRS by the rideshare company using Forms 1099-MISC or 1099-K. These forms take the place of Form W-2 that someone classified as a full-time employee would have. Drivers should record their work-related expenses, such as mileage, cell phone bills or supplemental insurance because those could serve as tax deductions. It’s also recommended that on-demand workers use a third-party rideshare assistant service like SherpaShare to automatically track mileage and expenses in one easy-to-use app.
Your independent contractor status also raises the question of whether you have a right to advertise your driving services on any platform. A current lawsuit in federal court challenges the concept that drivers must be exclusive to Uber or Lyft. The case draws upon people’s First Amendment rights to advertise themselves as drivers for hire.
Traffic tickets could inhibit your ability to keep working as a rideshare driver. Uber and Lyft can check for traffic citations and release a driver from service at any time. Rideshare drivers should take any moving violations very seriously and go to court to fight any citations, even minor ones, in order to protect their means of earning income.
You must also be aware that criminal convictions and/or traffic violations on your past record can impact your ability to pass the background check that companies like Uber and Lyft run on their applicants. To pass the background check and begin working, prospective rideshare drivers must have:
The investigation takes two to seven days and will look at county courthouse records in all the locations you’ve lived in over the past seven years. Federal court records, criminal databases, sex offender registries, Social Security records, and motor vehicle records will come under scrutiny as well. To pass a criminal background check and driving record check, a driver must:
Additionally, a record of reckless driving and DUIs is unacceptable for the rideshare driver’s background check. One caveat to this is that Californians can have a DUI on their record, as long as it happened over 10 years ago.
In addition to insurance policies, license requirements, and background checks, there are a few more issues rideshare drivers should look out for. As strange as it may seem, accepting tips could create a legal problem for drivers in some states. South Carolina, for example, prohibits cash transactions for ridesharing services.
Finally, although most fares will be routine, emergencies can happen. If someone who needs medical attention calls for a ride, you should tell them to call 911 instead. You may want to install cameras in your vehicles to record evidence or to protect yourself, since criminal activity could occur during a ride. If you see criminal activity, are assaulted by a passenger, or witness passengers assault one another, contact emergency services and an attorney. You may also want to contact the rideshare company in these cases as they can help. Lyft, for example, provides a critical response team that responds to drivers who experience damage to their vehicles, personal attacks, or other emergencies.
Attorney J. Blake Ledbetter leads the civil law practice for Conoscienti & Ledbetter, LLC, a law firm in Atlanta, Georgia. Mr. Ledbetter is a 2018 SuperLawyers Rising Star in the practice area of civil litigation and has written extensively about the legal ramifications of Uber accidents.
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