It is no secret that ride-hailing services such as Uber and Lyft are big business.  Although the services have taken a dip recently((The Motley Fool reported that Lyft will let go of 17 percent of its workforce and furlough some of its drivers to cut expenses during the COVID-19 pandemic. Uber is considering a reduction of 20 percent of its workforce, as many as 5,400 employees, because of the pandemic. Donna Fuscaldo, “Uber, Lyft Gear Up to Layoff Hundreds of Workers Amid COVID-19 Pandemic,” The Motley Fool (April 29, 2020), available at https://www.fool.com/investing/2020/04/29/uber-lyft-gear-up-to-layoff-hundreds-of-workers-am.aspx.)) because of the COVID-19 pandemic, they are still prevalent in our society.  For personal injury attorneys, it is imperative to be able to assist clients injured in automobile collisions involving ride-hailing services.  To properly assess which insurance carrier may be responsible to cover your client’s personal injury damages, and what funds are available, it is crucial to understand how different factual scenarios affect available coverages.

The headline is that in the proper scenario, you can recover up to $1 million for your client’s damages from the Uber or Lyft insurance policy. A brief explanation of ride-hailing services and how they work: Uber and Lyft drivers are considered part of the growing “gig” economy in which workers, with the assistance of mobile apps, drive people and deliver food, both from restaurants and grocery stores.  These services include Instacart, DoorDash, and others you’ve probably heard of and used. Drivers have to go through certain background investigations and provide legal documents to be cleared to start driving for ride-hailing services.

To drive for Lyft, the driver must submit a valid driver’s license, Social Security number, and proof of auto insurance.  Lyft conducts a background check on its drivers, including a Social Security number trace, nationwide criminal search, county court record search, federal criminal record search, and a sex offender registry search through the U.S. Department of Justice.  Lyft continuously monitors its drivers’ criminal backgrounds and requires its drivers to participate in a Community Safety Education program((https://www.lyft.com/safety/rider)). Uber requires all potential drivers in the United States to undergo driver and criminal screenings and background checks.  Drivers must also consent to annual screenings to continue driving for Uber((https://www.uber.com/us/en/ride/)).

In a nutshell, with ride-hailing apps, drivers get into their cars, open the Uber or Lyft app on their smartphones, and switch the app into “driver mode.”  This means the driver is on the clock and active.  When a potential passenger books a ride, the driver will pop up as an available driver to pick up the rider.  The Uber/Lyft apps are integrated with GPS technology to alert a driver to the location of the passenger.  The driver then goes to pick up the passenger at the location selected by the passenger.  The passenger is notified of the approximate time it will take for their ride-hailing driver to arrive.  The passenger agrees to pay for the fare and has bank account and/or credit card information stored within the app for payment.

Ideally, the passenger also inputs where they want to be dropped off.  The driver can follow the GPS directions or take directions the old-fashioned way from the passenger.  The driver then takes the passenger to the selected drop-off location.  The trip ends when the passenger gets out, and either the passenger or driver tells the app the trip is over, or when the two get far enough apart on the GPS coordinates, the app automatically ends the trip.

It is crucial to understand how these fact scenarios work to determine which insurance coverage is available to your client if they are involved in a collision involving a driver working for Uber/Lyft.

Say your client is driving for a ride-hailing service. Ideally, you would like the coverage for the ride-hailing service to apply because Uber and Lyft provide liability and collision coverage for their drivers when they are actively transporting a passenger, up to $1 million of uninsured/underinsured bodily injury coverage((Uber has a helpful illustrative webpage on this topic, https://www.uber.com/us/en/drive/insurance/.)) ((Lyft’s insurance policies for drivers are found here: https://help.lyft.com/hc/en-us/articles/115013080548-Insurance.)).  However, drivers who are out waiting to catch a “fare” but have not turned the app on to “available” are more or less on their own, depending on their personal insurance coverage.  Many carriers will deny coverage in this scenario absent an additional ride-hailing or commercial vehicle coverage.

For Uber/Lyft drivers, it is best to think about these scenarios in terms of three distinctly separate scenarios that shift along with your client’s workday:

• Uber/Lyft Scenario 1:  Uber/Lyft driver is traveling to a location with the ride-hailing application not activated.  There is no coverage from Uber/Lyft in this scenario.
• Uber/Lyft Scenario 2:  Uber/Lyft driver is in the vehicle with app activated as “available” and/or has received a ride request and is en route to pick up their passenger.  Uber/Lyft provides bodily injury coverage up to $50,000 per person and $100,000 per accident.
• Uber Scenario 3:  Uber/Lyft passenger is in the vehicle and the driver is en route to the passenger’s destination((Note once the trip is concluded within the app, the driver returns to Scenario 1.)).  Uber/Lyft provides bodily injury and UM/UIM coverage of $1 million per person.

Scenario 3 is obviously the best for your client because the $1 million per person third-party liability coverage kicks in along with the UM/UIM bodily injury coverage. Under Scenario 2, Uber/Lyft will cover $50,000 in bodily injury per person, $100,000 in bodily injury per crash, and $25,000 in property damage per crash.

However, if your client was in a collision under Scenario 1, he or she may run into a coverage gap and have limited to no recourse for recovery.  Lyft is clear that for New Mexico drivers, “[y]our personal insurance policy may not provide coverage while you are using your vehicle with the Lyft digital network or software application, depending on its terms.”((https://lyft.com/terms/disclosures))

Under Scenario 1, let’s say your client is driving to the airport in order to seek fares.  Your client has not yet activated his or her driving services in the ride-hailing app and is en route to the airport when a collision occurs.  Under this scenario, your client is left to recover from personal insurance or that of the other driver in the collision, who may or may not have applicable insurance coverage.  Many insurance policies have clear exemptions related to ride-hailing services for first-party claims and will deny coverage under these exemptions if they discover the vehicle was being used for ride-hailing purposes.  Some car insurance companies are offering additional ride-hailing coverage that would kick in under this scenario. Others would provide coverage if your client purchased a commercial vehicle policy.

It is important to spot the fact scenarios for your Uber/Lyft driver-clients, as well as potential clients who are involved in collisions with Uber/Lyft drivers.  Our office has successfully litigated a number of claims involving Uber/Lyft drivers.  In one scenario, our client was driving for a ride-hailing service when he was struck by a drunk driver.  Under this scenario, we successfully secured the policy limits of the drunk driver’s policy through a third-party claim. However, our client was not made whole with the settlement from the third-party claim.  As our client was in Scenario 3 at the time, the $1 million ride-hailing policy was unavailable to recover for the underinsured portion of our client’s claims.

In another scenario, we had a client who was hit by a driver of a ride-hailing service.  After the collision, the driver never told our client he was driving for a ride-hailing service at the time of the collision.  The client attempted to file a third-party claim with the driver’s private insurance company.  The private insurer denied coverage after an investigation, explaining that the driver had been driving for a ride-hailing service at the time of the collision, and thus they were exempt from covering the damages.  As this was again a Scenario 3 situation, our office later successfully satisfied the claim with the insurer for the ride-hailing service.

Any passenger who is injured while riding in a car driven by an Uber/Lyft driver officially through the app is covered under Scenario 3, and therefore the $1 million per-person coverage is available should you have a passenger-client injured in this scenario.  Uber claims its insurance covers passengers up to $1 million per person in the event of a collision ((https://www.uber.com/hc/en-us/articles/115013080548-Insurance)).  “Insurance for injuries to you and your riders if a covered accident occurs during an Uber trip and another driver is at fault and does not have sufficient insurance.”  Id. Lyft also provides up to $1 million in coverage per person for its passengers.”((https://help.lyft.com/hc/en-us/articles/115013080548-Insurance))

It will be crucial to pay attention to developing case law in New Mexico around these issues.  For instance, one NMTLA member, Komal Stiver, represents a ride-hailing service driver who was physically battered by a passenger while driving for the app.  Thus far, the service’s insurance has denied coverage for the claim and has asserted it is exempt based on the  holding of Britt v. Phoenix Indem. Ins. Co., 1995-NMSC-075, 120 N.M. 813, 907 P.2d 994.  However, Britt could be favorable for Ms. Stiver’s client under the decision’s three-part test regarding uninsured motorist coverage and intentional bad acts of the uninsured tortfeasor.

First, Britt found that the plaintiff’s stabbing injuries, though intentionally inflicted, constituted an accident “[b]ecause from [the plaintiff’s] viewpoint the stabbing injuries he sustained were an unexpected and united result of the automobile accident.”  Id. ¶ 8.  The second inquiry, whether the plaintiff’s injury arose out of the use of an uninsured vehicle and whether the plaintiff is legally entitled to recover from the operator of the uninsured vehicle, could prove tricky.  However, the driver was driving with the vehicle in motion when the attack occurred, and it would follow that this type of scenario would permit a ride-hailing driver to legally recover, as the ride-hailing services advertise and encourage people to use them after a night of drinking. Id. ¶ 9. Finally, the plaintiff would need to show a sufficient casual link between the use of the uninsured vehicle for transportation and the plaintiff’s injuries.  Id. ¶ 16. This third prong should be the easiest to meet, as the plaintiff was driving the vehicle to transport the uninsured tortfeasor and the plaintiff’s injuries occurred while in the car.

Stay tuned for more New Mexico case law regarding ride-hailing services to come up on appeal in the coming years.  Hopefully you’ve enjoyed reading this basic overview and found it helpful and resourceful.