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Ride Sharing vs. Traditional Taxis: How do Injury Insurance Claims Compare?

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Ridesharing companies like Lyft and Uber are aggressively expanding to new markets throughout the United States.

These companies are directly competing with traditional taxi companies. The taxi companies, however, are fighting back with a strong public relations campaign painting the ride-sharing companies as a danger to the community as a whole, and the passenger in particular.

Incredibly, the taxi companies claim that a passenger injured in a Lyft or Uber car during a car accident may very well find himself or herself without insurance coverage to pay medical bills, lost wages, and pain and suffering. This claim is usually accompanied by a stern "buyer beware" warning to those thinking about trying the ride-sharing services.

However, the reality is that Lyft and Uber provide massive mounts of insurance coverage for passengers personally than the coverage provided by taxi companies. The very same taxi companies leading the campaign claiming that ridesharing companies will leave you without coverage.

Lyft and Uber's Liability Policy Covers When the Driver's Insurance Denies a Claim

What is unique about Lyft and Uber's coverage is that it is "excess coverage" above what the actual driver carries for him or herself.

The critics have correctly pointed out that almost all insurance companies will deny a claim made against the ridesharing driver's policy-- why? The driver will almost certainly have a personal insurance policy and not a commercial insurance policy. And, personal insurance policies almost always exclude coverage if the driver was acting "for profit" when driving.

That means if you are a passenger injured while riding in the back seat of a Lyft car, you will almost assuredly have your claim with the driver's insurance company denied.

However, Lyft and Uber's Liability will pick up and cover damages even if the driver's policy rejected your claim. So, if you are riding in a Lyft vehicle, the argument that the driver's insurance company will not cover your injuries is immaterial: Lyft has you covered from the first penny.

Lyft and Uber provide $1 Million Dollars In Liability Coverage

So, how much coverage does Lyft or Uber provide those injured due to taxi driver negligence? According to the Lyft's certificate of liability policy, up to $1,000,000.00.

As you can probably guess, that is a massive amount of coverage. For frame of reference some states do not require drivers to carry bodily injury coverage. Of the states that do, the required coverage is usually between $10,000 to $25,000 per person injured in an accident.

But what about taxi cab policies? Every state is different, but states require a minimum amount of injury coverage for a taxi cab driver of between $250,000 and $500,000. Florida, for example, requires coverage in the amount of $125,000 per person and $250,000 per accident occurrence.

That means if you are injured due to your taxi driver's negligence in Florida, your cab driver is probably carrying only $125,000 in coverage. If you and your spouse (for example) are both injured, your total amount of coverage combined is $250,000.

And because taxi companies are in the business of making money, they rarely if ever carry more than the minimum required. Accordingly, in Florida, your coverage if you are injured due to your Lyft driver's bad driving is between 400 percent-800 percent greater than if you are injured due to a Taxi drivers' mistake.

Lyft and Uber Also Provide Coverage If You Are Hurt by an Uninsured Motorist Striking Your Cab

Perhaps even more noteworthy, Lyft and Uber will provide excess uninsured motorist coverage if you are injured by another vehicle and through no fault of your driver.

Let that sink in.

If you are hurt and Lyft's driver drove absolutely perfectly, Lyft will also pick up the tab for you if the driver's insurance (or your own insurance) does not pay or cannot pay for all of your damages.

And like Liability insurance, Lyft and Uber provide $1 million in Uninsured Motorist coverage.

What is Uninsured Motorist coverage? This is coverage you buy that protects you from getting injured by another person who does not carry insurance, or carries a small amount of insurance that cannot cover your bills.

But what about the taxis? Do they provide Uninsured Motorist coverage too? Much like liability coverage, every state is different in how they handle a taxi cabs Uninsured Motorist coverage. Florida, for example, does not require taxi cabs to provide uninsured motorist coverage for the cab's passengers.

That means if you are injured in a cab due to the bad driving of an uninsured motorist, and you do not have your own personal uninsured motorist coverage, you are out of luck. But if you are injured in the exact same scenario while riding in a Lyft or Uber vehicle, you will have up to $1,000,000.00 in additional insurance benefits available to you.

The Bottom Line

While there are still concerns over Lyft and Uber's personal property coverage for the driver, the bottom line is that the passenger in a Lyft or Uber vehicle often has more coverage available than if he or she was injured in an identical situation but in a taxi cab. In some states like Florida, that coverage can be more than 400 percent greater than the taxi cab's comparable coverage.

Be critical of the dire warnings of "buyer beware" regarding Lyft and Uber services, at least in regards to if you should ride in a Lyft or Uber car. If you a passenger, Lyft and Uber have got you covered.