Insurance Requirements for Rideshare and Delivery Drivers

Posted on September 19, 2022 in Car Accidents

The rideshare and delivery industries have expanded dramatically in the past decade. Rideshare companies have almost single-handedly displaced the taxi industry and delivery companies have changed the way we shop and order food. However, these new and expanded industries have different rules when you have suffered an injury from one of their drivers. While negligence is still the general rule, a straightforward process now has numerous complexities and wrinkles attached. Reach out to a rideshare attorney to receive your consultation if you have experienced an accident from a rideshare and delivery driver.

These Companies Do Everything They Can to Protect Their Finances

Rideshare and delivery companies try to do everything that they can to shift all liability risks off of themselves. They do not want to be defendants in court cases when their drivers cause an accident through negligence. Accordingly, these companies create a legal arrangement that prevents drivers from legally being considered “their employees” and “their drivers.” Instead, they call drivers independent contractors to avoid paying employee benefits and lawsuit settlements.

Legally, an employee’s acts are legally the acts of a company. When a negligent employee injures someone, the company must pay. Alternatively, independent contractors are not a company’s agents for liability purposes. The company does not have to pay for a negligent independent contractor.

Instead, the accident victim must take action against the independent contractor. It does not matter that the company profits from the driver’s acts. Unless you can prove that the legal arrangement of an independent contractor was a legal fiction, you cannot sue the company.

Many major companies use independent contractors who either transport people or goods.

In the rideshare universe, the following companies classify their drivers as independent contractors:

  • Uber
  • Lyft
  • Via
  • Wingz

Companies like Walmart and UPS employ their own drivers to make deliveries. Therefore, if you are in an accident with a driver for one of these companies, you can sue the company directly for your damages. Amazon partly hires its own drivers and independent contractors.

However, other companies use independent contractors to make deliveries.

For example, these companies do not hire employees to make deliveries:

  • FedEx (the company is fighting allegations in federal court that it misclassifies drivers as independent contractors)
  • Grubhub
  • Uber Eats

If FedEx owns the delivery truck and a FedEx employee drives it, FedEx insures its vehicle for up to $5 million. Its insurance providers are Old Republic and Liberty Mutual. UPS has liability coverage of $1 million per vehicle, and the company is legally responsible when the damages exceed the policy limit.

Drivers Must Meet Minimum Insurance Requirements Under State Laws

These companies cannot simply offload all their legal risk onto you. To operate, the company needs to provide its drivers with an insurance policy to cover their damages. There is no overarching federal requirement for a minimum level of insurance for rideshare companies. Instead, states set different minimums. Rideshare drivers must have personal auto insurance and coverage under the corporate policy rideshare companies must provide.

Insurance Coverage for Rideshare Accidents

The insurance coverage for rideshare drivers in Arizona depends on when an accident occurs:

  • Suppose the app is on, but the driver has not accepted a request or has no passenger in the car. In that case, the policy pays $50,000 in bodily injury per person, $100,000 in bodily injury per accident, and $25,000 in property damage per accident.
  • Once the driver accepts a ride request or has a passenger in the car, a $1 million liability coverage per accident applies.
  • If the app is not on, the driver’s own personal auto insurance coverage applies.

A handful of states require more than these minimums. For example, New Jersey requires $1.5 million in total coverage per accident.

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The Maximum Coverage Amount Is Just a Number (and Often Not Enough)

If serious injuries occur in the accident, your damages may exceed $1 million. The last thing that you want is to have only enough money for your medical expenses and nothing more.

If the auto insurance coverage is not enough, you will have to file a lawsuit against the driver directly. As unfair as it seems, Uber and Lyft do not have to compensate for the shortfall.

The chances of collecting a judgment directly from the rideshare driver are minimal since they likely do not have the assets to pay you. However, many people who drive for rideshare insurance companies also purchase additional insurance that can protect them in a severe accident.

Different Companies Offer Different Levels of Insurance Coverage

For food delivery platforms, the requirements are murkier. Again, everything is on a state level. Some states do not have a required minimum insurance coverage for food delivery drivers.

For example, Grubhub vaguely requires drivers to have “auto insurance,” but it does not provide drivers with additional coverage.

Doordash insures its drivers with up to $1 million in coverage, so long as they are in the process of making a delivery. Otherwise, accident victims will need to file a claim against the driver’s personal auto insurance.

Other delivery companies will carry varying amounts of insurance. FedEx will insure its own vehicles for up to $5 million, but independent contractors are responsible for their own insurance. Amazon may provide up to $1 million in coverage for its contractors.

Given the severe damage that truck accidents cause, you can expect the independent contractor to have a relatively large policy. Otherwise, they risk personal liability for anything that insurance does not cover. Usually, these policies are at least $1 million.

Rideshare Companies Partner With Insurance Companies

When a rideshare or delivery company provides insurance, they have massive contracts with large companies.

On its website, Lyft heralds its own “trusted auto insurance partners,” such as:

  • Allstate
  • Liberty Mutual
  • Mobilitas (a company formed to cater to the rideshare industry)

When the rideshare company partners with the insurance company, it’s seeking to safeguard its business and finances. These companies care about their interests first, not yours. When you are injured by a driver, it’s your responsibility to find the best legal counsel who will represent your interests first.

You Need to Work Hard to Get Every Dollar

Even when a company provides insurance to its drivers, it does not mean that you will get that amount – or even anything. Your accident injuries may be worth $1 million, and there is $1 million in coverage, but you may find yourself offered a fraction of that in a settlement.

Assuming that the rideshare or delivery driver is an independent contractor, the company tries to protect itself from liability, leaving you to deal with the driver’s insurance company. The rideshare company, which heavily markets itself to you, does not care whether you receive full compensation for injuries by one of its drivers.

You will need to fight hard for every penny you deserve. The companies’ insurance carriers will make your life more difficult. An insurance company does not want to pay your claim. If you are an injured passenger, you may be sent to the other driver’s insurance because the rideshare insurance may not think their driver was at fault. If the insurance company makes you a settlement offer, it will likely cover less than your case is worth.

Why You Need a Lawyer for Your Accident Case

You need a car accident lawyer to obtain full compensation for your injuries and losses. Even if you identify the proper insurance companies to cover your claim, going against them without legal representation is a mistake.

Some ways they limit liability include:

  • Convincing you to accept a quick settlement that is far too low
  • Telling you that a lawyer is unnecessary
  • Getting you to say something that goes against your claim

The insurance company will not take you seriously if you approach them independently. They may make you a pitifully low settlement offer hoping you will accept. They may not negotiate fairly with you.

Once you have a car accident attorney, insurance adjusters know you mean business, so hire legal representation from the start.

The rules are generally very complicated when you suffer an injury from a rideshare or delivery driver. You may have no idea who you can sue or how to file a lawsuit against them.

If you suffered an injury from a truck driver making deliveries, you might sustain significant injuries. Given your case’s high stakes and complexity, you need to hire an attorney to handle your matter.

What a Car Accident Lawyer Will Do For You

Bob Boatman Personal Injury Attorney

Robert W. Boatman, Car Accident Attorney

An experienced attorney can:

  • Investigate your accident to determine who was responsible for the crash
  • Gather proof of what happened to include with your insurance claim
  • Review your medical records and personal situation to come up with the number that you legally deserve in damage
  • Help you navigate the maze of coverage and options to know where and how you should file a claim
  • Prepare your claim to submit to the insurance company
  • Handle all the communications with the insurance company
  • Review any settlement offer you receive to determine whether it fairly compensates you (Tip; the initial offer you get will almost certainly be for less than you deserve)
  • Give you advice on whether to accept or reject a settlement offer
  • Negotiate with the insurance company and make
  • Take your case to court if the insurance company will not offer you fair compensation

You cannot and should not handle the process alone. A personal injury lawyer works for you on a contingency basis, meaning there is no risk or cost to you in hiring an attorney. Take the first step and contact an attorney to learn more about your case.