Lyft Announces New Insurance Coverage For Drivers

The ride-service company Lyft on Wednesday announced it is offering additional insurance coverage to augment a $1 million excess liability policy mandated by the California Public Utilities Commission.

From the Lyft Blog:

(W)e have worked with leading insurance carriers to now provide additional insurance solutions for drivers on the Lyft platform. Today, we’re excited to be the first company to announce three additional excess coverages now live:

• Collision ($2,500 deductible and $50,000 maximum applicable to drivers who have purchased collision coverage on their personal policy)
• Uninsured motorists ($1M limit covering drivers if they are hit by an uninsured motorist that is at fault)
• Underinsured motorists ($1M limit covering drivers if they are hit by an underinsured motorist that is at fault)

Two weeks ago, Kara Cross, general counsel for the Personal Insurance Federation of California, told us the lack of uninsured and underinsured motorist coverage was one of the defects in TNC insurance. Cross said that drivers injured while on a TNC call could only draw on the TNC coverage if the TNC driver was judged to be at fault. Lyft's new insurance coverage seems intended to address that.

In addition to the new coverage, Lyft said it is taking part in a new group called the Peer-to-Peer Rideshare Insurance Coalition, which will address "how the insurance industry can continue evolving to support the growing peer-to-peer economy." Lyft said the group is made up of "transportation companies, regulators, insurance providers, and other stakeholders," as well as the CPUC. The first meeting is scheduled for this month.

Andrew Noyes, a spokesman for UberX, which has been luring Lyft drivers away with bonuses, said in an email that the company has offered uninsured/underinsured motorist coverage since December. He said while the company does not have collision coverage, "we have been addressing this in practice by reimbursing drivers if their own collision insurance denies, with no deductible."

Insurance is something of an Achilles Heel for the burgeoning ride-service industry, which has stolen a substantial share of customers and even drivers from the local taxi industry. In November we wrote about a welter of issues surrounding insurance for companies like Lyft, UberX, and Sidecar. Some of what we found:

• The Transportation Network Companies, or TNCS, as the CPUC designates them, say drivers’ personal insurance policies will cover some claims. The insurance industry says the policies won’t provide any coverage.
• The insurance industry says TNC drivers will have to buy commercial insurance to be covered when they’re driving for hire and maybe even when they’re not.

We also talked to multiple drivers who have not told their insurance companies about their TNC work because they are fearful their personal policies will be cancelled. At least two cancellations have been documented, including one in January, when a driver on a Lyft Facebook page posted a Geico cancellation notice she received for "commercial use of your 2012 Toyota Prius."

The posting sparked a long online discussion among Lyft drivers. Wrote one fellow Lyft driver:

“No one, I mean no one told me my insurance would have a problem with it. What’s Lyft’s response to the fact that serving for them may end up with us losing insurance and possibly our livelihood?”

Lyft's announcement today would not seem to solve that issue. On the Lyft Lounge, a posting of the announcement was greeted with a mixture of enthusiasm, skepticism, and questioning. Two comments:

• I still think before we jump onto the Good Ship Lollypop, we should get specific answers to specific questions. What we have now is a great first step, but we need to fully understand what we have here. So while this has calmed the troubled waters for now, it needs to be fully explained....unless of course, someone in the general community can do so.
• This is NOT a solution! It's still an excess insurance policy. In the event of an accident, you must still file a claim with your personal insurance company, and the excess policy will only kick in once your claim has been rejected. In addition to being rejected, your insurer will also drop your coverage. Doesn't sound victorious to me...

At one point in the long thread, Lyft CEO John Zimmer stepped in to answer doubters: "Big step with the new coverages and we'll keep working on more to come."

In addition to the cancellation risk, a fatal New Year's Eve accident in San Francisco involving an UberX driver brought to light the narrow circumstances under which TNCs consider their drivers covered. In that accident, the driver, who had come to the city for the express purpose of servicing UberX customers, according to his lawyer, was between calls. That excluded him from coverage, according to UberX. Lyft has a similar exclusion.

In January, the California Dept. of Insurance issued a warning to TNC drivers about the insurance gap. And no less an authority than Consumer Reports recently published an article called "Don't risk your car insurance by operating your vehicle as a part-time taxi."