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Uber Insurance Problems – Part 2 – Uncovered Medical Bills

By February 2, 2017February 23rd, 2021Personal Auto Insurance, Personal Insurance

Article Update: New Jersey adopted a new eff May 1, 2017 that does allow for SOME coverage for medical bills for drivers.  More on the new law can be found here

In my previous post I talked about how personal auto policies in New Jersey are excluding coverage for people providing services like Uber and Lyft. I also explained the limited insurance cover that Uber and Lyft provide.  The Uber insurance problem that I want to talk about today is how New Jersey’s No Fault Auto Insurance Law does not allow Uber and Lyft drivers to be covered for medical bills they incurr when in an auto accident.

Back in the 1970’s when shag pile carpet was all the rage the State of New Jersey passed a law requiring that every auto insurance policy pay for medical bills regardless of who was at fault for an accident, with a minimum limit of $250,000. The coverage was named “Personal Injury Protection” or “No Fault Insurance”.  Forty Five years later this coverage still exists under every standard personal auto insurance policy although now you can buy limits as low as $15,000.

The coverage also provided compensation for loss of income if you were disabled in an auto accident, provide some money to pay someone to come to your home to perform “essential services” like cooking or cleaning, and a small death benefit if you died from an auto accident.

In my previous blog post I pointed out specific exclusions in the personal auto policy that remove coverage for everything related to Uber and Lyft. If you are adventurous and a little crazy like me, you may have tried to read the Personal Injury Protection coverage endorsement under your auto policy.  I’m certain you couldn’t find anything that said it was excluded.  So it stands to reason that if there is no exclusion there is coverage right?  Unfortunately, the answer is no.

The Law

Personal Injury Protection coverage was created by statute by the humble legislators of our great state, and in that law they declare when coverage should and should not apply.

The law states that Personal Injury Protection coverage does not apply to a vehicle used as a public or livery conveyance for passengers. Here’s the part of the law that I’m referring to:

A private passenger automobile of a private passenger or station wagon type that is owned or hired and is neither used as a public or livery conveyance for passengers nor rented to others with a driver; {emphasis mine} and a motor vehicle with a pickup body, a delivery sedan, a van, or a panel truck or a camper type vehicle used for recreational purposes owned by an individual or by husband and wife who are residents of the same household, not customarily used in the occupation, profession or business of the insured other than farming or ranching.

Law Reference: N.J.S.A. 39:6A-2(a)

If you were to ask me today (January 25, 2017) if an Uber or Lyft driver is covered by Personal Injury Protection under his auto policy, I would have to say no. The law doesn’t allow for it.  My position would change if the law is amended or if there is a court case ruling by the New Jersey Supreme Court where by coverage is given.

Now one may say that according to Uber’s website some states have No Fault coverage at similar levels to limos and taxis. In New Jersey, limos and taxis are not required to carry No Fault coverage.  The assumption is that limos and taxi drivers have purchased Workers Compensation coverage.

So how much would Workers Compensation coverage be for me as a driver?

To calculate the premium for Workers Compensation coverage we have to use payroll. Therefore, any money you make from Uber or Lyft would be considered payroll.  In New Jersey, a sole proprietor would have to be charged a minimum payroll amount.  In 2017, that minimum payroll is $630 per week which is $32,760 a year.  The current rate for a taxi cab is $20.58 per $100 of payroll so the cost is $8,605.00.  Here is a link to the math.

Now for the sake of argument, if the NJ Workers Compensation Bureau allowed you, Mr. Uber Driver, to get around the minimum payroll charge because you are not doing this full time, the minimum premium is still $900.00 for a policy.

If you want to play around with this further, here is a link to the New Jersey Assigned Risk Workers Compensation plan and you can experiment all you want with the payrolls. Make sure you put in the class code, number of employees, and total payroll.  The calculator will do the rest.

Would my private health insurance plan cover me?

Every health insurance policy either purchased individually or an employer sponsored plan generally excludes coverage for work related injuries, because workers compensation coverage is supposed to be the sole remedy for work related injuries and health insurers want to avoid claims being reported under both workers compensation and health insurance. We call this “double dipping”

If you do buy a health insurance policy for yourself, you better check with the insurance carrier first to see if they do cover you.   There’s no set answer to this.  It depends on what you buy or the coverage in your employer’s health insurance plan.

There are a few things to think about when it comes to health insurance vs workers compensation coverage.

Health Insurance Workers Compensation
Deductibles and Co-Payments Apply No Deductible, no Co-Payments
New Deductibles and Co-Payments apply if your medical treatment overlaps your policy renewal date No deductible or Co-payments apply even if ongoing medical treatments from the accident go past the policy renewal date
If policy cancels for non-payment or not renewed ongoing medical bills do not get paid. Benefits are still paid if policy is cancelled for non-payment or not renewed.
No Disability Coverage for injuries that are temporary or permanent Disability is paid for temporary or permanent basis

Would Uber or Lyft cover me for my injuries?

The contract you agreed to with Uber or Lyft makes you an independent contractor. Uber and Lyft don’t want to cover you if you are injured while driving using their app.  There is an excellent article by Jamison Mark from Mark Law Firm regarding the legal standing that Uber and Lyft are taking when it comes to classifying their drivers as independent contractors.  I highly recommend you read it.

Here’s the rub

As an Uber or Lyft driver you don’t have many options when it comes to paying your medical bills. The risk vs rewards is yours to decide on.

Scott Harrigan

About Scott Harrigan

Scott started his career in insurance in 1988 and joined Rue Insurance in 2004 as a Marketing Specialist focusing on creating effective risk financing and risk transfer programs for companies and non-profit organizations. In addition to this he is a member of the Rue Insurance educational team that provides ongoing professional development in critical insurance concepts and programs to Rue employees. About Scott | More Posts by Scott