Last New Year’s Eve, a six-year-old girl, Sofia Liu, was struck and killed as she crossed the street in San Francisco. Now, Sofia’s family is filing a wrongful death lawsuit, seeking compensation for medical expenses and emotional trauma.
But they’re not suing the driver who hit their daughter, Syed Muzzafar. Instead, they’re laying the blame on Uber, the incredibly popular ride-sharing app that now operates in over 130 American cities and 53 countries. Muzzafar was using Uber’s service to locate a fare at the time of the collision, and Sofia’s family is arguing that Uber should be held responsible for the tragedy.
Uber disagrees, and is vehemently fighting the case.
Is Uber Liable For The Mistakes Of Its Drivers?
State and federal regulators have been battling over the liability of Uber and other ride-sharing services for years.
New York’s taxi industry, on the other hand, solved the problem of responsibility a long time ago. While a particular taxi can be owned either by its driver or leased from an umbrella company, all taxis must carry a minimum insurance policy mandated by the Taxi & Limousine Commission. When passengers or pedestrians are injured, the insurance coverage will cover their expenses. If an injured party decides to sue, rather than rely on an insurance company’s payout, they can file suit against a driver or taxi owner depending on whose negligence caused the accident. Importantly, there’s no legal barrier that necessarily separates the taxi’s owner from its driver.
But so far, a barrier does exist between the drivers who use Uber and the company itself. As a result, suing Uber has proved difficult, if not impossible.
How Does Uber Protect Itself From Accident Liability?
Uber is markedly different from your traditional taxi company. Drivers who use Uber to find fares are, at best, independent contractors. They’re not actual employees, just private individuals who own their own vehicles.
In reality, Uber is simply an app, an app that makes it extraordinarily easy for drivers and passengers to find each other. Uber made this very argument in a hearing with the California Public Utilities Commission, writing:
“Uber operates no vehicles, and does not hold itself or advertise itself as a transportation service provider…In fact and law, Uber does not provide transportation services of any kind and does not own, lease or charter any vehicles for the transportation of passengers. On the contrary, Uber is a technology company…”
These comments came in the face of mounting pressure from California’s legislature to regulate Uber, making its use safer for consumers. A large part of this increased protection would come through enhanced liability insurance requirements.
In effect, Uber was saying: “if you want to regulate us, you can only regulate our app, the technology we’ve created. You can place restrictions on the drivers who use our app, but those restrictions can’t touch us. Those drivers are just private individuals.”
So Who Is Liable?
Drivers who use Uber are offering a private service with their own privately-owned vehicles. And over and over, Uber’s executives have argued that the company is not liable for accidents, because any crashes were the result of a driver’s error. And drivers are legally responsible for their own mistakes.
Uber’s own contract with drivers makes this clear: “Uber and/or its licensors shall not be liable for any loss, damage or injury which may be incurred.”
Did California Fix The Problem?
California’s lawmakers found a partial way around the problem. Lumping Uber, Lyft and Sidecar into a new category, California legally redefined ride-sharing services as “transportation network companies.” As such, California’s Governor, Jerry Brown, was able to expand required insurance coverage. Brown mandated a minimum of $50,000 per person primary liability coverage and $100,000 for death or personal injury.
But, and this is crucial, the plan can be purchased either by drivers or the ride-sharing company. This distinction acted as a loophole for Uber to exploit. If Uber buys the insurance, it need only cover accidents that occur while a driver is actively using the app.
What Insurance Do Uber Drivers Have?
It depends on the service you’ve requested. UberBLACK, UberSUV, and UberTAXI drivers are all covered by commercial insurance policies, which generally amount to around $1 million in coverage.
UberX, the company’s true ride-sharing service, is more complicated.
When the driver’s app is turned off, only their personal auto insurance is in effect. In New York, that’s a minimum of $10,000 covering property damage, $25,000 for personal injury and $50,000 for death.
Once the app is turned on, but before picking up a passenger, Uber drivers are covered by their personal insurance policy and a “contingent” liability plan. This additional policy offers $50,000 for personal injury per person injured, but maxes out at $100,000. Notably, the contingent policy is secondary to a driver’s personal plan, so it only covers expenses that exceed coverage offered by the primary policy.
As soon as a driver picks up a rider, and until drop-off, UberX drivers are covered by a commercial insurance policy. This plan provides $1 million in liability insurance and $1 million in uninsured or underinsured motorist coverage. This insurance becomes the primary plan, and kicks in before any funds are necessary from their personal policy.
How Much Are New York’s Taxis Required To Carry?
Unlike Uber, New York’s traditional taxi industry is cut-and-dried. There are strict insurance requirements, although they’re actually lower than the ones that Uber just put in place.
For yellow cabs and black cars, taxi owners must maintain insurance policies that include:
- $100,000 per person
- $300,000 per occurrence
- $200,000 in Personal Injury Protection (PIP)
What Does Insurance Tell Us About Safety?
Insurance requirements may be a useful yardstick in measuring the perceived danger involved in certain activities. Now that we all agree that driving is a potentially dangerous thing to do, we require drivers to carry insurance. We perceive inherent dangers in the use of automobiles, and try to reduce the risk ahead-of-time, by making funds available to those involved in accidents.
Uber’s higher insurance requirements, regardless of any sketchy loopholes built into the system, may suggest that Uber considers its service more dangerous than the Taxi & Limousine Commission considers yellow taxi cabs. Increased scrutiny over Uber’s background checks, which have come under considerable fire as shoddy, fly-by-night affairs, seems to support this conclusion. While taxi drivers are rigorously screened, using fingerprinting and criminal record databases, Uber’s are not.
But all that is hypothetical until we’re given access to hard data, real records of accidents. For New York’s yellow cabs, we have OpenData, which compiles motor vehicle crash statistics on a running basis and includes numbers specific to cabs and livery vehicles. Currently, there’s no way to check up on accidents involving Uber drivers. And that’s a real problem.