Ride-Sharing Comes to Ohio: Who Pays When an Uber or Lyft Driver Crashes?

Published July 22, 2014 · Injury Law Basics

Tap a phone, and a stranger in a personal car pulls up to drive you home. Uber launched in Columbus in December 2013 and in Cincinnati this past March, and it is expanding city by city; Dayton riders are watching for an announcement. The convenience is real. So is a problem that most riders, and most of the drivers, have never thought about: when one of these cars crashes, it is not clear whose insurance pays.

What ride-sharing is, and why insurers care

Uber and Lyft call themselves technology companies. The drivers are not employees in the traditional sense. They use their own cars, their own personal auto insurance, and a smartphone app that connects them with riders. The companies take a cut of each fare.

That business model collides with a standard clause in nearly every personal auto policy sold in Ohio. Personal policies exclude coverage while the car is being used to carry people for a fee, sometimes called a "livery" or "public or livery conveyance" exclusion. The logic is simple from the insurer's side: a car driving strangers around for money all day is a commercial risk, and the driver did not pay a commercial premium for it.

So the moment a driver starts working for a ride-share company, his or her personal insurer has an argument that the policy does not apply. Ohio has no statute, as of this writing, that tells ride-share companies what insurance they must carry or that closes this gap. The General Assembly has not acted, and neither has the Ohio Department of Insurance. For now, the answer lives in the fine print of the companies' own policies.

The three "phases" of a ride-share trip

Both Uber and Lyft have announced that they carry commercial liability coverage for their drivers, and the figure that gets repeated in news coverage is $1 million. The catch is when that coverage applies. The companies divide a driver's day into phases, and the coverage changes with each one.

• Phase 1: App on, no ride request yet. The driver is cruising, waiting for a request. This is the gray zone. The driver's personal policy may deny coverage because the driver is "working," and the company's primary coverage generally has not kicked in because no ride has been accepted. Some companies describe contingent or limited coverage for this phase; others have been less clear.
• Phase 2: Ride accepted, driving to the pickup. The company's commercial coverage is generally described as applying here.
• Phase 3: Passenger in the car. This is where the full commercial coverage is most clearly in effect.

If you are a passenger, your crash will almost always happen in Phase 3, and the company's coverage should respond. If you are the other driver, a cyclist, or a pedestrian, you may have been hit during Phase 1, and that is where injured people get bounced between insurers, each pointing to the other.

Who is at risk from the gap

Everyone on the road, but in different ways.

Passengers. You did nothing wrong and have a claim against whichever driver caused the crash. We explained the general rules in our post on an injured passenger's rights. The question is which policy pays. If your ride-share driver was at fault, you look to the company's commercial coverage. If another driver was at fault, you look to that driver's liability policy, which may carry only Ohio's minimum limits.

Other drivers, cyclists, and pedestrians. If a ride-share driver hits you while waiting for a fare, expect the driver's personal insurer to deny the claim under the livery exclusion and the company to argue it was not yet "on the clock." Neither denial is the final word, but you may need a lawyer to force the issue.

The drivers themselves. Ride-share drivers often do not realize their personal policy may not cover their own car or their own injuries while they are working, and that a claim could even give the insurer a reason to cancel the policy.

Why minimum limits make the problem worse

Ohio raised its minimum auto-liability limits on December 22, 2013, to $25,000 per person and $50,000 per crash, as we discussed in our post on the minimum-limits increase. Those numbers were an improvement, but a single emergency-room visit with imaging can approach $25,000, and a surgery blows past it. When the at-fault driver has minimum limits and the ride-share company's coverage is in dispute, the injured person's own policy becomes the most important document in the case.

Your own policy: UM/UIM and MedPay

Ohio law allows, but does not require, insurers to offer uninsured and underinsured motorist coverage under R.C. 3937.18. If you carry it, it does two things in a ride-share crash.

First, if the at-fault driver has no coverage that applies, because the personal insurer denied the claim under the livery exclusion and no commercial coverage responds, your uninsured motorist coverage can step in. Second, if the at-fault driver has only minimum limits, your underinsured motorist coverage can pay the difference up to your own limits. We have written about what UM/UIM coverage is and why every Ohio driver needs it, and our page on uninsured and underinsured motorist claims explains how these claims are made.

Two cautions. UM/UIM coverage typically follows the person, not the car, so it can protect you as a passenger in someone else's vehicle, including a ride-share car. But policies also contain their own exclusions and deadlines, including a requirement to give the insurer notice and to protect its right to recover from the at-fault driver. Do not sign a release with any insurer until your own coverage has been examined.

MedPay, if you carry it, pays medical bills regardless of fault and can bridge the gap while the liability fight plays out.

What this means for you

If you are hurt in a crash involving a ride-share vehicle in the Dayton area, assume that at least one insurer will deny the claim and that the denial is a negotiating position, not the law. Get the driver's name, the company, the personal insurance card, and a screenshot of the trip if you were the passenger. Note the time, because whether the app was on and whether a ride had been accepted determines which coverage applies. Then have a lawyer identify every policy in play: the driver's personal policy, the company's commercial policy, any other driver's liability policy, and your own UM/UIM and MedPay.

Our page on Dayton car accident claims explains how we build these cases. Ride-sharing is new in Ohio, the rules are unsettled, and the companies have lawyers and insurers who know the fine print. You should too.