Let’s face it, most Uber and Lyft drivers are not out there driving for the life experience. They are not hobbyists. They are driving to make money. Some drivers do it part time while others try to make a full time living from driving for Uber or Lyft. Our Miami Uber accident lawyers hear the stories from our clients who drive and were injured in a car accident. One thing is absolutely clear, driving for Uber or Lyft is not an easy way to make a living.
Let’s consider the economics of driving for Uber and Lyft. The first thing to know is that these companies take money off the top of every ride in terms of fees and percentages of the total ride. Lyft provides the option of giving a tip while Uber does not. In general, drivers can expect to lose 20-25% of every ride fee to the company. Many drivers will only look at their weekly take home and subtract the amount of gas money they spent to figure out if they had a good week. But if we dig a little deeper, that profit margin shrinks even further.
A proper analysis of an Uber driver’s profitability should include the cost of wear and tear on the vehicle; depreciation of the vehicle’s value; and the cost of insurance. The issue of insurance is even more complex than it might initially appear.
All Uber and Lyft drivers are required to have and prove that they have car insurance before they are allowed to drive. Curiously, Uber and Lyft only require proof of a potential driver’s personal liability insurance. They do not require proof of rideshare or commercial insurance which is more expensive. If they did require that then you can be absolutely certain that the pool of drivers for Uber and Lyft would shrink.
One of the core strengths of Uber and Lyft is the number of drivers that they have available. The more drivers they have, the more power Uber and Lyft can wield. Look at the simple concept of the tipping option for Uber drivers. Since the beginning, Uber drivers have begged Uber to provide their customers with a tipping option. Uber has steadfastly refused and has basically told drivers that if they disagree then they can simply stop driving for Uber because they have plenty of drivers.
Having as many drivers as possible allows Uber and Lyft to drive fares down and engage in price wars which benefit the consumers but hurts the drivers. If the drivers protest reduced rates the only response they get is if you don’t like it then don’t drive – we have more drivers who will drive for whatever we say the price should be. In short it is obvious that Uber and Lyft drivers have no leverage.
So what does the insurance for Lyft and Uber cover exactly? It is complicated. Both companies offer up to one million dollars in coverage under certain circumstances. This actually requires a closer examination. Here is what we found when the Uber or Lyft driver is signed onto the app:
- Insurance Coverage Limits with Passengers or After Acceptance of a Ride Request: Uber and Lyft provide $1M liability per accident and $1M Underinsured/Uninsured Motorist Coverage per accident for the driver and passenger(s)
- Insurance Coverage Limits While App Is On But Before Acceptance of a Ride Request and No Passengers: Uber and Lyft provide $50,000 per person and $100,00 per accident and $25,000 for Property Damage to Other Vehicle(s)
- Insurance coverage for Collison/Comprehensive: Both Lyft and Uber provide up to $50,000 in coverage but only when Uber or Lyft passengers are in the vehicle
- Deductibles for Collision/Comprehensive: Uber has a $1000 deductible. Lyft has a $2500 deductible.
If the Uber or Lyft driver is signed in but is waiting for a ride request and an accident happens, then Uber and Lyft will require the driver to submit the claim to their own personal car insurance. Only if the driver’s insurance company denies the claim or fails to fully reimburse the loss will the coverage from Uber or Lyft fill in. It is this gap that some insurance companies are now offering to provide rideshare insurance coverage at a separate premium.
The question for Uber and Lyft drivers is whether to purchase this additional rideshare insurance coverage. Drivers should be aware that if they do not disclose their Uber or Lyft driver status to their personal insurance company then they risk having their entire policy cancelled for what is called a material misrepresentation. If the driver’s policy is cancelled under that scenario, then the next time the driver goes for insurance they will most likely face a much higher cost because of the previous cancellation because they are a bigger risk. The higher the risk, the more the premium will cost.
If you are an Uber or Lyft driver with insurance questions before or after a car accident, you can always call the Miami Uber accident lawyers at Wolfson & Leon for a free consultation. You can reach us 24/7 at (305) 285-1115.