Expanded Insurance Coverage for Rideshare Drivers

California’s Insurance Commissioner Dave Jones has approved a new insurance coverage option from Farmers Insurance Group that will cover insurance gaps for drivers for rideshare companies, such as Uber, Lyft, and Sidecar. The new product will cover the period when the driver turns on the on-demand transportation app and waits for a passenger match.

Under previous rules, rideshare companies only had to have insurance for their drivers while the driver was en route to pick up a passenger and while the passenger was in the car. There were no rules addressing the time when a driver scanned for passengers, known as “Period 1,” and it was not clear whether a driver’s personal insurance policy would cover this period. Most personal insurance policies have a livery exclusion, which means they do not apply to commercial activities.

Last year, California enacted legislation requiring rideshare drivers to carry this insurance coverage during Period 1. Assembly Bill 2293 provides that personal insurance policies no longer provide coverage for drivers engaged in commercial activity with a rideshare company. It also states that rideshare companies must provide a $1 million commercial policy covering death, personal injury, and property damage. This policy covers the time between when the driver has accepted a ride through either the end of the transaction or when the passenger leaves the vehicle, whichever is later.

During Period 1, either the driver or the rideshare company must purchase an insurance policy in the amount of:

• $50,000 for death and personal injury per individual;
• $100,000 total per incident for death and personal injury; and
• $30,000 for property damage.

The company must also maintain a policy of $200,000, providing excess coverage for the company and the driver. The law takes effect on July 1.

The new Farmers policy provides that, for an eight percent surcharge, drivers for rideshare companies can extend their existing Farmers insurance to cover Period 1, when the driver is signed into the app but has not yet matched with a passenger to pick up.

The law means greater protection for other drivers and for pedestrians. Because of the livery exception, people injured by rideshare drivers during Period 1 have not been able to recover compensation for their injuries from the driver’s insurance companies. But with the new law, if a victim is hit by a rideshare driver while the driver is on duty, the victim will be able to negotiate with an insurance company and, if necessary, file suit to collect damages, whether or not the driver has been matched with a passenger.

If you have been injured by a rideshare driver, a dedicated attorney can help you negotiate with the insurance company and go to court if needed. Please contact the dedicated San Jose personal injury attorneys at Corsiglia, McMahon & Allard, L.L.P. to discuss your personal injury claim and discover whether you may be eligible for compensation.