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Uber and Lyft Under Fire: To Rideshare or Not to Rideshare

Published on Feb 14, 2019 at 3:34 pm in Rideshare Accidents.

Rideshare companies like Uber and Lyft have created an incredibly convenient way for people to get around in the “for-hire” transportation world.  The rideshare application (“app”) almost instantly connects individuals to drivers.  The app is simple to use, and has become a regular mode of transportation from millennials to baby-boomers.

To become a rideshare driver is simple.  Typically, the drivers don’t have to meet the same licensing and inspection requirements that apply to the more traditional taxi and limousine services.  Rideshare companies allow individuals from all walks of life to earn extra money utilizing their own vehicle through a very simple application process which typically does not include much, if any, background check.  In cities where these options are available, taxi/limousine ridership has declined.

While these companies provide great, convenient services, the risk management, insurance and compliance issues that exist are in many instances unchartered territories.  This is especially true when it comes to safety and insurance coverage (ie.) whether riders are “covered” and, if covered, to what extent coverage applies when they swipe their phone to get a ride. 

How Rideshare Apps Work

While the various ridesharing services like Uber and Lyft have some differences, they basically operate under the same principle.  While almost anyone can be a driver for Uber or Lyft, each rideshare company has different minimum standards for screening their drivers and vehicles.  When a potential rider activates the app for a ride, they can then see available drivers and make a request for a ride on their smartphones.

Most apps will display the driver’s location, route and provide an estimated time of arrival.  The driver’s name, photo, and vehicle information will also be shown.  The ridesharing service takes a large cut of the fare for each ride a driver completes.  Depending on the day of the week, time of day, level of traffic, and length of the ride, there can also be surcharges.   Although you are paying this premium in those instances, your driver is still only making his or her percentage of the initial price you were quoted.

While these apps are incredibly convenient for passengers who need a ride and make it easy for drivers supplement their income, there are risks that most passengers aren’t aware of or don’t think about.  There is not much regulation, and it can be difficult to navigate what local laws and/or regulations that the rideshare service and their drivers are governed by and need to follow.  Additionally, after an accident, there is often a dispute about what insurance coverage applies and who is considered liable.  This is because drivers are using their personal vehicles on which they carry insurance for both “personal use” and for a “business purpose” as a driver for the rideshare companies.

Because of the marketing schemes in place, most consumers and users believe that the drivers are the agents or employers of drivers.  They believe that the ride has the safety and backing of the rideshare company such as Uber or Lyft.   However, unbeknownst to the consumer/ rider, some rideshare companies have attempted to “cover themselves” by including disclaimers on their apps and on the long “terms of service” that riders are required to sign off on before using the app.  Most riders never even consider reading or don’t understand the legal effect of terms like “independent contractor” or “third party” – which can in some instances result in the rideshare company not being liable — that have been included in these terms of service.

To make things worse, some rideshare services have gone as far as claiming that they aren’t in the transportation business at all.  Instead, they claim they are a technology service that exists merely to connects riders and drivers – drivers who they assert are independent third parties.  They also say that the rider accepts all risks.  While making HUGE profits off of the transportation that is provided as a result of the app, the rideshare companies take the incredulous position that they aren’t in the transportation business!

State Regulations

While taxis are strictly regulated on a city-by-city basis and are required to follow strict guidelines, ridesharing services haven’t traditionally been regulated or been required to follow the same strict regulations.  In fact, when they started, there was little or no regulation over these companies.  Fortunately, this is beginning to change, albeit at a slow pace.  Some states have finally started to pass laws that create standards and insurance requirements for ridesharing.  There are also numerous cases that are making their way through the court system, and the precedent these decisions will make will help decide the issue of who can be held liable for accidents that occur with or involving rideshare vehicles.

Risks to Riders

As stated above, when a passenger activates their app and accepts a ride in a vehicle arranged by a ridesharing app, they automatically agree to a number of terms and conditions. If a passenger is injured in an accident, there is no guarantee that that the driver’s insurance company or the ridesharing service will provide sufficient coverage to pay for damages.  For example, a driver’s personal insurance company may decide that the driver was driving for profit and, for that reason, the “business use” exclusion of their insurance may be asserted in an attempt to deny responsibility to provide coverage for the accident.

While the rideshare companies provide coverage, they have traditionally been aggressive in defending the cases, often denying responsibility and trying to take advantage of the self-serving language they include in their terms of service.  They have also only provided limited coverage in the past.  Passengers need to be aware of these risks.

In addition to this, safety is a concern.  Since there is little, if any, background checks on drivers, there are not assurances provided by the rideshare companies as to the safety of the drivers in both their driving records or whether they have criminal backgrounds.  Additionally, there is no real regulation of the mechanical condition of the vehicles that they are driving.  The only information a passenger really has on how reliable a driver is comes from the information in the ridesharing app about the driver – which is input by other riders, not the rideshare company.

Rideshare companies appear to be here to stay.  Their success and growth has been nothing short of explosive.  Riders enjoy the convenience these companies provide.  In order to assure future safety in this growing industry, further regulations and oversight is needed.

If you’ve been injured in a rideshare accident, you may benefit from reaching out to our injury lawyers. Our attorneys understand how traumatizing an automobile accident can be and the difficulties to cope with knowing that the event could have been entirely prevented.  They also know how to navigate through the nuances of a rideshare case.

If you or a loved one has been the victim of a rideshare automobile accident, it’s important to explore your legal rights and options. We’ll help you receive the compensation you deserve, so you can recover and move on. Contact us today for a free case evaluation.

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