If an Uber or Lyft driver gets into an auto accident, whose insurance pays the bills? A set of bills before the Michigan Senate lay out a compromise between the companies, the state, and their insurers.
Since 2014, there have been concerns about what would happen to passengers if an Uber driver or Lyft vehicle was involved in a crash. It is a conversation that has been going on nationwide. Now Michigan hopes to join 40 other states in adopting a legal compromise that is intended to fill insurance gaps and keep everyone safe.
Uber, Lyft, and other “transportation network companies” (TNC) pose problems for regulators. Their drivers aren’t licences chauffeurs. Their vehicles don’t count as taxis or limos. But they are transporting passengers for compensation – a commercial purpose. This puts them in a gray area between private drivers and commercial vehicles. Insurance companies hoped to use that gray area to avoid paying no-fault and liability benefits when TNC drivers or their passengers were injured.
So in 2015, the National Conference of Insurance Legislators, a group of state lawmakers who focus on insurance issues, created model language that everyone could agree on – including the transportation companies and insurance providers. Now that model language has made its way to through the Michigan House and to the Senate in the form of House Bills 4637, 4638, and 4641.
Regulating Uber and Lyft
The proposed bills impose a variety of different regulations on the companies themselves, including everything from reporting requirements to background checks of drivers. Perhaps most notably, TNCs would be required to create non-discrimination policies and enforce them against drivers. The companies would also have to develop polices against drunk driving and drugged driving.
A Compromise on Insurance
To solve the question of who pays after an auto accident, the bills require either the driver or the TNC to carry additional insurance that applies while the driver is on the clock, and while he or she is transporting passengers. On top of Michigan’s mandatory no-fault insurance (also called PIP), a TNC driver will need to carry proof of additional insurance that covers:
- Residual Third-Party Auto Liability Insurance For $50,000 Per Person Or $100,000 Per Accident To Cover Death And Bodily Injury, And An Additional $25,000 To Cover Property Damage. This Insurance Applies While A Driver Is Logged Into The System, But Not Transporting Passengers.
- Residual Third-Party Auto Liability Insurance With A Combined Single Limit Of $1 Million To Cover All Death, Bodily Injury, And Property Damage While Carrying Passengers.
There are many more details to the bills than are described here. All together, they show a clear compromise between everyone involved and appear to protect passengers and drivers from falling through insurance cracks.
David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. If you have been seriously injured by an Uber or Lyft driver, contact Christensen Law today to schedule a free consultation.