W. John Weir, Managing Partner at Weir Attorneys
New Jersey accidents involving ride sharing companies, such as Lyft and Uber, trigger insurance issues favorable to those who are injured as a result of the motor vehicle accident. Unlike taxi cabs, which typically only provide $15,000 in liability coverage under New Jersey law, Uber, Lyft and other ride sharing companies are required to provide far more coverage for those injured by the negligence of an Uber or Lyft driver. To determine the amount of insurance available for payment for injuries caused by the fault of the driver, an analysis of the status of the driver is necessary as the insurance coverage limits change depending on the driver’s status.
To understand the insurance coverage issues, one must first understand how Uber, Lyft and other transportation network companies work. The drivers for these companies are not employees, rather they are independent contractors using their own cars to transport passengers. The drivers sign up for the services and must undergo background checks before they can begin working. As independent contractors, the drivers only work when they want to work. When they want to work they log on to an app on their phone which connects them to those in need of a ride. The driver may be driving with the app activated for minutes or hours without any passengers. N.J.S.A. 39:5H-12 permits insurance companies to exclude all coverage for a private passenger vehicle when that vehicle is logged on to a transportation network company's digital network. In other words, an Uber driver's personal automobile policy may exclude all liability and other insurance coverage when the driver is logged onto the Uber system. However, this same law also provides that the transportation network company must provide certain coverage when the driver is logged on to the system. N.J.S.A. 39:5H-10 became effective on May 1, 2017 and sets forth the amount of coverage that must be provided by the company. When logged on to the system, the law provides that the driver must have a minimum of $50,000 liability coverage per person and $100,000 per accident as well as $25,000 in property damage coverage. What this means is that a person injured by the negligence of an Uber or Lyft driver in New Jersey has $50,000 in coverage available for any injuries caused by the fault of the Uber or Lyft driver when the driver is logged onto the app but does not have a prearranged ride.
As soon as the Uber or Lyft driver has a prearranged ride the insurance coverage changes dramatically. N.J.S.A. 39:5-10(c) requires the driver and ride sharing company to provide at least $1,500,000 in liability coverage for injuries caused by the driver’s negligence. In addition to this, the insurance will also provide $1,500,000 in uninsured or underinsured motorist coverage. Simply put, if you are a passenger in an Uber or Lyft vehicle you will have $1,500,000 in coverage for injuries in an accident caused by the fault of any driver.
Just as importantly, when the Uber or Lyft driver is transporting a passenger, there is no PIP coverage for medical expenses. The payment of medical expenses for an injured passenger would be through his or her own medical insurance or by way of a lawsuit for unpaid medical bills. On the positive side, as there is no PIP coverage for medical bills, in any claim against the Uber or Lyft driver, there is no verbal threshold defense available to the Uber driver.. What does all of this mean? If you are injured in New Jersey as a passenger in an Uber or Lyft vehicle, your claims for medical bills and personal injury will be paid by a substantial policy protecting the Uber or Lyft passenger. Moreover, you will not have to prove you sustained a permanent injury as defined by New Jersey’s No Fault Act. For the driver of an Uber or Lyft vehicle, there is also no verbal threshold defense when a different vehicle caused the accident. The Uber or Lyft driver will also have access to $1,500,000 in underinsured motorist coverage. For information on the verbal threshold, click here.
Unlike the laws protecting taxi cab operators, New Jersey has generous protections for those injured in an accidents involving ride sharing companies. Next time you need a ride, consider the protections offered to Uber and Lyft passengers before you opt for a taxi.
For more information on important insurance coverage issues, contact John Weir at (609) 594-4000 or email at jweir@weirattorneys.com.