In February 2017 I released a series of articles about Uber and the gaps in insurance coverage for NJ drivers who use their own vehicles to drive for companies like Uber. (Links are below) Shortly thereafter the State of New Jersey released a ride-hailing legislation law that came into effect on May 1, 2017. The new law makes some improvements to the type of insurance coverage that is now available to Uber & Lyft drivers.
One thing to note. I refer constantly to Uber & Lyft in this article. They are the two most popular ride hailing companies operating in New Jersey and around the country. However, they are not the only ones. The law applies to any other company who provide the same kind of services.
Medical Coverage for Drivers
The one thing I find encouraging, under the new law, is the ability for an Uber & Lyft drivers to have some form of coverage for medical bills incurred while driving. However, the adequacy of the limits available may not be sufficient if the accident is serious.
Under the new law, Uber & Lyft are required to carry Personal Injury Protection coverage (PIP) during Period 1. Period 1 is when a driver has his Transportation App open and is waiting for a potential rider to hail him.
Pay close attention to the following: The law does not state how much limits need to be provided.
In NJ the standard limit of PIP is $250,000. However, limits can go as low as $15,000. The other question is how much of a deductible does Uber & Lyft provide? In New Jersey the minimum deductible is $250, but that deductible can go as high as $2,500. The certificates of insurance that Uber & Lyft show on their website do not disclose a PIP limit or deductible. Therefore, if you are an Uber or Lyft driver, check with them to see what they are providing.
While the driver is in Period 2 and 3 the Law requires Uber & Lyft to provide $10,000 of medical payments coverage to the driver.
The driver can try to seek PIP and medical payments coverage from his own personal auto insurance company but coverage is not guaranteed. The new law does not require a personal auto insurance company to provide coverage unless you have a Ride Sharing Endorsement under your policy.
If you have a personal auto insurance policy with a Ride Sharing Endorsement, check with the insurance company or agent to see how they handle PIP or medical payments coverage. The Ride Sharing endorsements that I have seen only address Liability, Medical Payments, Uninsured Motorists Liability, and Physical Damage (aka Comprehensive & Collision) coverage in Period 1 and nothing in Period 2 or 3. Also the endorsements didn’t apply to PIP coverage.
Some other insights to the law
Minimum Age of Driver
Parents of teenagers who are eager to use their cars for Uber & Lyft can rejoice for the state law requires that the minimum age of an Uber/Lyft driver is now 21. So if your son says he wants to be an Uber driver tell him, “Sorry kid, the law says no. Find another job and don’t forget to clean your room.”
No declination of coverage from drivers auto insurance company
The new law states that an Uber or Lyft driver does not have to get a declination from his insurance company to engage Uber or Lyft for insurance benefits for the driver & vehicle. Prior to 5/1/2017 the driver had to obtain a declination from his personal auto insurance company first before talking to Uber or Lyft.
Minimum Limits of Liability coverage
The law requires during Period 1 that Uber & Lyft have to provide the following:
- Liability Limits of Bodily Injury coverage of $50,000 per person and $100,000 per accident
- Property Damage coverage of $25,000
- Personal Injury Protection Coverage for the driver (as mentioned above)
- Uninsured & Underinsured Motorists Liability coverage. However the law does not state how much. New Jersey’s minimum limit is Bodily Injury with $15,000 per person, $30,000 per accident and Property Damage of $5,000
- If the driver’s own personal auto policy does not provide coverage then Uber & Lyft’s insurance will act as if it’s primary coverage.
During Period’s 2 and 3 Uber & Lyft have to provide the following:
- Liability limits for Bodily Injury and Property Damage in the amount of $1,500,000
- Medical Payments for the driver of $10,000 (as mentioned above)
- Uninsured & Underinsured Liability of $1,500,000
Verbal Tort Threshold Law Protection Unavailable
In a previous blog post I mentioned that a driver won’t have any protection under the NJ Tort Threshold law to avoid certain lawsuits from passengers injured while being transported by the driver. The new law affirms this position. Therefore, even if the accident is small, you can still be sued by your passengers.
Leinholders & Banks can now rejoice
If Uber & Lyft provide coverage for your car for physical damage AND you have a lienholder on your car, Uber & Lyft have to compel their insurance carrier to include such lienholder in payment for damages to the car. Why is this significant? When I read through Uber’s Auto Physical Damage policy, lienholders had to prove to Uber’s insurance carrier that they didn’t have access to any other insurance to pay for the damages. Only then would Uber’s insurance carrier pay the claim.
Driving Record Requirements
Finally, having and maintaining a clean driving record is paramount for an individual to drive for Uber or Lyft. The law clearly states that if a driver has more than three moving violations in the past three years or has one of the following violations in the past three years, he cannot drive for Uber or Lyft. The four specific violations are:
- Driving under the influence of alcohol or a controlled substance
- Resisting arrest or evading an officer
- Reckless driving
- Driving with a revoked or suspended license
My take on the new law
Drivers have to weigh the risks they face if deciding to use their personal car to drive for Uber or Lyft. The coverage that Uber & Lyft require under the new law is a step in a better direction for a driver, but the adequacy of such coverage is questionable. My opinion is Driver Beware.
My review of the law is not exhaustive and there are other administrative matters addressed. But if you love to read the law you can check it out here.