In the insurance company’s mind, Muzaffar was still working, making him ineligible for coverage. But Uber thought otherwise.

“At the time of the accident, Mr. Muzaffar was operating his own vehicle and was not transporting a rider who requested his transportation services through the Uber app… there was no reason for Mr. Muzaffar to interact with the Uber app,” the company said in a statement.

“They fundamentally believed that they didn’t have to provide coverage,” says Armand Feliciano, vice president of Association of California Insurance Companies (ACIC), referring to the problems encountered in dealing with Uber during recent legislation which mandated insurance minimums in California.

Extra coverage

Throughout the nation there are laws, both at the state and city level, that establish minimum insurance liability levels for cabs. For example, New York City taxi cabs require a minimum of $200,000 of personal insurance protection (PIP) for bodily injury.

However, unlike taxicab companies or even livery services where drivers pay out of pocket for the insurance, TNC’s have started to build insurance into their policies for their drivers.

“Lyft drivers are automatically added to these insurance policies at no charge upon being approved to drive for Lyft,” says Paige Thelen, a spokeswoman for Lyft.

The practice is unusual, but not unheard of, according to Matthew Daus, president of the International Association of Transportation Regulators (IATR).

“Most drivers around the country are independent contractors, who own their vehicles and have the insurable interest, so fleets paying for coverage is not the norm for taxicabs and liveries,” Daus writes to PC360. “Though there is a growing trend of large national limo companies converting their drivers to employees with cars owned by the limo fleet.”

Lyft and Uber, however, are unique for insuring their drivers much like a fleet of their own cars, but making sure to legally keep their drivers at arm's distance legally by claiming them as independent contractors, indemnifying them of future contractual issues.

A moving target

TNC’s began cutting their teeth in public policy as early as 2012, when Uber was being forced out of cities for a number of regulatory reasons. The earliest problem was when Washington D.C. tried to establish a minimum fare for Uber that was five times the base price of taxis.

“Why would you want to make a great transportation option only accessible to the rich and well-heeled,” wrote Uber co-founder Travis Kalanick to DC Council members in July of 2012. “Why would you so clearly put a special interest ahead of the interests of those who elected you?”

But legislation is finicky across the nation.

In states like Alabama, there are “guest passenger” statutes that still do not cover injuries sustained by passengers unless the driver takes part in “willful or wanton conduct,” according to the R Street report.

And Uber has been strictly reading the letter of the law, citing the lack of language involving apps, according to critics.

“They went back to a bunch of policies that were updated 20 years ago and said there was nothing in there about apps,” says Feliciano.

There is little question that laws have yet to evolve as quickly as technology, and the current trend of peer-to-peer consumerism is making many lawmakers speculate on the future of other apps.

California already set laws for apps like Getaround or RelayRides, which allows users to rent out their own cars for a set amount of time. More bills are expected to be introduced in next year’s legislature, specifically regulating insurance standards for AirBnB, according to Feliciano.