Ridesharing using smartphone apps is a relatively new phenomenon. Sometimes called real-time ridesharing, it’s a service that arranges one-time shared rides on very short notice. Before ridesharing, if a person needed a ride for hire, they would typically either call a cab service or stand on the street waiting for a cab.

Today, ridesharing is considered an alternative to pricy cab rides that may take a long time to find. Ridesharing companies use GPS devices, smartphones and social networks to connect drivers with riders. Some of the companies who offer ridesharing services include Uber, Lyft, Sidecar, Wingz and Carma Carpool. These companies are called Transportation Network Companies, or TNCs, and they were outlawed in California for a brief period of time, but now are allowed to operate in the state.

Unfortunately, the insurance industry has not kept up with these technological changes. The California Public Utilities Commission recently proposed that any driver with a ridesharing app turned on to accept rides be required to maintain a $1 million commercial liability policy. Currently, there’s a gap in insurance coverage. It’s not clear when a TNC’s commercial insurance policy covers an accident and when a driver’s personal automobile policy would cover an accident. For example, if a driver has the app on and is waiting for a match to a customer from the TNC and has an accident, will the TNC’s commercial policy cover damages, or will the driver’s personal policy cover damages? Right now, it’s unclear who is responsible.

The California Public Utilities Commission is hoping that the insurance industry will provide a new product specifically for TNCs like Uber that doesn’t require a commercial license. Currently, no insurance company has yet announced a product tailored for TNC drivers. They also don’t have an endorsement to cover drivers when they are driving for a ridesharing company. However, at least one company, Uber, has announced that it is working to develop a policy for TNC drivers with its insurance carrier. It also has new insurance that will cover the gap between personal and commercial policies that currently exists.

TNCs are generally fighting against the California proposal to require a $1 million commercial liability policy, arguing that it stifles competition and will drive up costs for consumers. However, a tragic accident in San Francisco earlier this year involving a TNC has shined a spotlight on the problems with TNCs and insurance coverage gaps. On New Year’s Eve, a 6 year old girl was killed by a driver who was logged onto the Uber smartphone app to provide a ride, but wasn’t currently transporting anyone. The family sued Uber, who said that the accident did not involve a vehicle who was providing a trip on the Uber system, and that Uber had deactivated that driver’s account.

As you can see, if drivers for TNCs are underinsured or even uninsured, and the TNC denies liability for accidents that occur with their drivers, a potential nightmare legal situation unfolds anytime anyone is involved in an accident with a driver for a TNC. Hopefully, the insurance industry will come up with an insurance solution to address all the liability of all parties involved in the accident. Until then, anyone involved in an accident with a ridesharing company such as Uber, Lyft, Sidecar, or another TNC may have a potential legal problem in sorting out which party is liable.

If you have been involved in an accident involving a driver for a TNC or ridesharing company, there are a lot of legal issues you should consider, some of which may be complex. If you’re in the San Francisco area, call Micha Star Liberty, San Francisco automobile accident attorney, at 510-645-1000 or 415-896-1000. She can help you sort through the legal nightmare and obtain compensation for your accident. Call today to learn more.

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