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Ridesharing presents challenges and opportunities for insurers

Ridesharing services provided by Uber, Lyft and similar transportation network companies rely on smartphone apps to connect passengers with independent drivers. But are their drivers adequately insured?

By Norma B. Levy and Louis H. Kozloff | Updated on October 21, 2014
Ridesharing services provided by Uber, Lyft and similar transportation network companies rely on smartphone apps to connect passengers with independent drivers.

Ridesharing services provided by Uber, Lyft and similar transportation network companies (TNCs) rely on smartphone apps to connect passengers with independent drivers.  TNCs entered the marketplace several years ago and have been growing quickly because there are few barriers to entry.  Initially, TNCs escaped insurance requirements and other costly regulations imposed on taxis.  However, TNCs are now being scrutinized by insurance and other regulators seeking to ensure that TNCs and their drivers are adequately insured.    

TNCs do not own the vehicles that provide ridesharing services or employ the drivers.  The driver and the vehicle are independent of the TNC when not “on duty.”  However, going “on duty” is as simple as pressing a button on the driver’s smart phone app, signaling that the car is available to accept passengers.  The driver accepts an assignment – or is “matched” with a passenger – and then proceeds to the passenger pick-up site.  The assignment ends when the passenger is dropped off.  

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