For anyone involved in a car crash involving a ridesharing service, determining legal liability for the motor vehicle accident can become complicated very quickly because of the unique legalities that apply to ridesharing businesses. This is true under both the state laws of Indiana and Illinois, as well as particular municipal regulations that can apply to rideshares such as the extensive regulations enacted by the City of Chicago for ridesharing services.
In Chicago, Uber and Lyft and other ridesharing service providers are considered to be “Transportation Network Providers” (“TNPs”) under the city’s municipal code and must conform to Chicago’s specific requirements for all TNPs. For details, see Chapter 9-115 of the Municipal Code of Chicago.
Rideshare Drivers versus Cabbies or Taxi Drivers
According to Chicagology, taxi service has been available in the Windy City since August 1915 when Yellow Cabs first hit the streets. The Encyclopedia of Chicago reports that Checker Cabs followed suit in 1922 with several years of riotous non-regulation of the new taxi cab industry followed by legislation and the creation of formal associations for the cabbies and taxi drivers. By 1999, over 6000 taxi cabs served the City of Chicago under the banners of either Yellow Cab, Checker Cab, American-United, or Flash Cab where taxi drivers drove motor vehicles leased to them and cabbies got their customers through dispatchers at the cab companies when not being hailed down from a Chicago sidewalk.
In tandem with the growth of the taxi cab industry came court cases and legal precedents, alongside statute and regulation, that today forms a cohesive and longstanding body of law that applies to any motor vehicle accident involving a taxi or cab in Chicago as well as the rest of Illinois, or the state of Indiana.
However, this body of law cannot be carried over to apply when ridesharing services are involved. Ridesharing through Uber or Lyft in Chicago and elsewhere is part of the 21st Century’s evolving “sharing economy.”
The Sharing Economy and Evolving Ridesharing Liability Laws
The sharing economy has been defined as “… a peer-to-peer (P2P) based activity of acquiring, providing, or sharing access to goods and services that is often facilitated by a community-based online platform.” It is an innovation borne of advancing computer technology and ready access to smartphones that allows people to “…share use of idle assets and services or to facilitate collaboration ...” where an “…online platform that connects buyers and seller.”
Ridesharing is an example of the evolving sharing economy in the United States, allowing people to use their own motor vehicles to make money by taking other people for rides around Chicago or elsewhere for a price. Uber and Lyft offer the online platforms that allow driver and passenger to connect.
The distinctions between the sharing services of Uber or Lyft and the taxi transportation services provided by a local cab company are numerous, of course. Of particular importance for those who may be involved in car crashes with an Uber driver or Lyft car is where legal liability attaches and who is to be held liable under state accident law for the collision and its resulting injuries.
For instance, in an accident involving an Uber or Lyft driver, will that driver’s automobile insurance policy cover the damages sustained not only by the driver but others who are injured in the crash? After all, when most people get auto insurance, they aren’t applying as a commercial driver but only as someone who drives their vehicle to home, work, school, and other personal pursuits.
If the driver signs up for Uber or Lyft gigs, then does that policy extend to his or her for-profit driving efforts? This is not an issue for the traditional cab driver, by comparison. For details, read McPeak, Agnieszka A. “Sharing tort liability in the new sharing economy.” Conn. L. Rev. 49 (2016): 171.
Uber and Lyft Insurance Policies for Ridesharing Drivers
In some states, it is possible for a ridesharing driver to pay for an “endorsement” to his or her existing automobile accident insurance policy to cover commercial accident claims. However, many ridesharing drivers will opt for insurance policies provided by Uber and Lyft specifically for ridesharing car crashes.
Both Uber and Lyft insurance policies apply when the ridesharing driver’s auto insurance carrier has denied the accident claim as going outside of its personal policy coverage.
Uber’s coverage applies as follows, quoting Uber.com:
1] Available or waiting for a ride request, Uber maintains the following auto insurance on your behalf in case of a covered accident:
- Third-party liability if your personal auto insurance doesn’t apply¹
- $50,000 in bodily injury per person
- $100,000 in bodily injury per accident
- $25,000 in property damage per accident
2] En route to pick up riders and during trips, Uber maintains the following auto insurance on your behalf in case of a covered accident:
- $1,000,000 third-party liability
- Uninsured/underinsured motorist bodily injury²
- Contingent comprehensive and collision³
- Up to actual cash value of car with a $2,500 deductible (Effective 3/1/2021)
- Certain vehicles offered through the Vehicle Marketplace are subject to a $1,000 deductible.
Lyft’s coverage applies as follows, quoting Lyft.com:
1] App is on, waiting for a ride request, Lyft provides third-party liability insurance for covered accidents if your personal insurance does not apply. 1
- $50,000/person for bodily injury
- $100,000/accident for bodily injury
- $25,000/accident for property damage
2] App is on, picking up passengers or during rides, Lyft provides the following insurance for covered accidents:
- $1,000,000 for 3rd-party auto liability 1
- Uninsured/underinsured motorist bodily injury2
- Contingent comprehensive & collision up to the actual cash value of the car ($2,500 deductible). 3
Notice that both Uber and Lyft offer liability insurance coverage for ridesharing accidents for up to $1 Million when the ridesharing driver is involved in a rideshare crash anytime between pick-up and drop-off.
Accident Liability of Ridesharing Companies Uber or Lyft
A separate legal liability question arises when the injury victim considers the potential responsibility of the rideshare company itself for the accident and its consequences. This is an evolving area of personal injury law, with ridesharing companies (and their insurance adjusters and defense counsel) fighting hard to argue they should not be accountable for the failures of their drivers, because in a sharing economy they are distinctly different from a traditional taxi cab company.
To this end, legal arguments have been made that the ridesharing driver who take advantage of Uber or Lyft apps to make side gig money are not employees of these companies, but instead independent contractors. For more, read “Uber and Lyft Drivers Call For Federal Intervention In Their Gig Worker Labor Fight,” published by CBS on June 17, 2021.
Insurance Coverage of Other Drivers
Of course, in any accident there is also the possibility that the Lyft or Uber driver is not at fault, and the crash has been caused by the failure in the duty of care of another individual, usually another driver involved in the crash.
In ridesharing accidents, therefore, it is very important to investigate and determine the legal causes of the crash to ascertain legal responsibility and damage liability for all resulting injury damages.
Justice for Ridesharing Accident Victims in Chicago, Illinois, and Indiana
For those who suffer bodily injuries as a result of a motor vehicle accident involving a rideshare vehicle, it is very important to investigate the accident in great detail for facts that support claims for legal liability as well as researching the current laws and regulations that may create responsibility for either the Uber or Lyft driver, the ridesharing company itself, as well as other parties who may have contributed to the collision event.
For more on Uber and Lyft crash claims, read:
- Uber Accidents in Chicago: The Growing Danger of Serious Injury in an Uber Rideshare Car Crash
- Lyft Accidents in Chicago: Liability for Ridesharing Car Crash Injuries
- Ridesharing Accidents: Claims for Injuries during Uber or Lyft Ridesharing Car Crash
- Ridesharing Accidents in Indiana and Illinois: Uber and Lyft Injury Claims
- Ridesharing and Traffic Fatalities: Driver Fatigue and Drowsy Driving as a Public Safety Risk
For more on insurance company coverage claims, read:
- Bad Faith: When an Accident Victim is Victimized a Second Time by the Insurance Company
- Insurance Company Has Duty To Settle Your Claim: Bad Faith Lawsuits Against The Insurer.
The sharing economy is here to stay in Chicago, Indianapolis, and other cities and towns in our part of the country. Ridesharing services like Uber and Lyft are extremely popular here, and it is vital that everyone understand how legal liability in the event of a crash may be very different for someone who uses a rideshare app instead of calling for a cab. Please be careful out there!
¹ We maintain automobile liability insurance on your behalf if you do not maintain applicable insurance of at least this amount.
² Uninsured/underinsured motorist bodily injury limits vary by state.
³ May apply to damage to your vehicle as long as you have personal insurance that includes comprehensive and collision coverage for that vehicle to cover you while you’re not using the Driver app.
1 Policies may be modified to comply with state or city insurance requirements.
2 Coverage, where provided, may be modified to the extent allowed by law.
3 Applies if a driver has obtained comprehensive and collision on their personal auto insurance policy.
