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Consumers love Uber and Lyft, two ride services that use mobile apps to connect passengers with part-time drivers who use their own vehicles.  The businesses operate outside of most state regulations of a traditional taxi service, and are therefore coming under much scrutiny from state regulatory agencies.

On June 5, 2014, Virginia’s Department of Motor Vehicles sent cease and desist order to Lyft and Uber, telling the two companies that they must stop operating in violation of Virginia law or face fines against their part-time drivers. The Lyft Cease and Desist letter is here. The Uber Cease and Desist letter is here.  In April, the Virginia DMV fined Uber $26,000 and Lyft $9,000  for trips that their drivers provided in Virginia. Despite the warnings and fines, Lyft and Uber continue to operate in Virginia.  A similar scenario is unfolding in Florida and in other states.  The Virginia DMV is studying Virginia’s motor carrier laws, and seems likely to recommend legislative changes that will legalize the ride companies’ business model.

Along with the June 5 cease and desist orders, the Virginia DMV Commissioner issued a warning to consumers to research any ride service and learn about its insurance coverage, vehicle maintenance, and driver screening process before using it.  The Commissioner directed consumers to a list on the DMV website where consumers can search for a company to see if it is registered and insured under state regulations.  Neither Uber nor Lyft is on the Virginia DMV approved list.

I’ve never used Lyft, but have had great experiences with Uber in New York City.  My concern when using any ride service where the driver is operating his or her personal vehicle is whether the vehicle is insured for use as a taxi service or “livery.”  The reason for my concern is that the Virginia standard automobile insurance policy ( and I assume most other state’s standard policies) excludes coverage if one is using his personal vehicle for a livery service.  In order for a ride service driver’s personal vehicle to be covered for use as a taxi service, the driver must pay an additional premium.  See the Extended Non-Owned Coverage (Vehicles Furnished or Available for Use as Public or Livery Conveyances)-Virginia form here.

Lyft does a nice job on its website addressing concerns about safety and insurance issues.  It states that its drivers are “background checked.”  Lyft’s app also sends the consumer a photograph of the driver, GPS tracking of the driver’s route, and the driver’s ETA.  Additionally, all Lyft vehicles have big pink mustaches mounted on the grill, thus eliminating any anxiety for the passenger that he or she is getting into a rogue vehicle.   Lyft also posts on its site the “Lyft Insurance Protection Plan.”  If the representations are accurate, the Lyft insurance plan appears to provide up to $1 million in coverage.  Here is Lyft’s summary of its coverage:

We created our $1M liability and uninsured/underinsured policies as excess over a driver’s personal insurance. The excess coverages will also drop down and act as primary insurance when the driver’s personal policy doesn’t respond. Our contingent coverages step in if a driver’s personal policy doesn’t respond and do not act as excess or in addition to the driver’s own personal policy.

Uber has been around since 2009, and, according to its website, operates in over 70 cities.  Unlike the Lyft site, Uber’s site glosses over the issue of its driver’s insurance coverage.  Uber states:

Licensed &

From insurance to background checks, every driver meets all local regulations.

I take this to meant that Uber simply requires its drivers to prove to Uber that the driver carries the minimum state-required automobile insurance coverage.  In Virginia, the minimum coverage is $25,000.00.  Moreover, this does not address the concern that the coverage exclusion for operating one’s personal vehicle as a livery applies.  Unlike Lyft, Uber does not claim on its site that it provides insurance coverage in addition to the coverage that its driver’s carrry on their personal vehicle.  After I originally posted this blog, a commentator sent me a ling to an Uber blog in which Uber states that it also provides $1 million in insurance coverage on its drivers’ vehicles for the time that they are in use as a ride service.  Uber should consider making this known on its website.


  1. Gravatar for rodger

    They do not care the right insurance or are they legal. The Taxi and delivery business need special insurance, business licenses, and other things. These places will be in lawsuits forever. What about the drivers are the employees or independent contractors?

  2. Gravatar for Michael Phelan


    Thank you for providing the information on Uber's insurance. I'm glad to see that they provide the same coverage.

  3. Gravatar for ClaimsAdjuster

    UberX and Lyft provide secondary insurance while the primary is the drivers. Since the primary is usually invalid non-commercial insurance, the secondary insurer is not legally obligated to pay up.

    UberX and Lyft require that their drivers first file a claim against their personal policies in an at-fault accident. They do this in the hopes that the driver's insurance company won't notice that their policyholder is running a taxi business with his car. This is insurance fraud.

  4. Gravatar for David

    The most amazing part of the insurance provided by these ride share companies is that they do NOT cover the driver or the Driver's car so if you have an accident all injury and damage caused to the driver and their car is NOT insured by anyone. Could amount to hundreds of thousands of dollars. The drivers are being exploited by UBER and LYFT.

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