
Leon Law explains myriad dynamics of rideshare insurance risks
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When taking advantage of the convenience a rideshare business offers are we adequately covered by vehicle-for-hire insurance premiums?
In the 21st century, consumers have a plethora of choices to make when it comes to getting around town in major metropolitan areas and the Valley of the Sun is certainly no exception.
But when taking the passenger seat what should you know when it comes to protecting oneself in the event of a personal injury?
“The main impact we see when dealing with a personal injury claim associated with these services is the available insurance coverage,” said Jose Leon, founder of Phoenix-based Leon Law.
“Drivers of these services will create motor vehicles accidents like any private individual would, but the general public will have the opportunity to have increased financial security. It is still early with autonomous vehicles, but the hope is that those services are safer which in turn will create less accidents and injuries.”
For more than a decade, Leon Law and its dedicated staff have taken on the mantra of education first — no matter the case, client, or circumstance. Mr. Leon has called the Phoenix metropolitan area home since 1998, after growing up in Nogales, Ariz. He was born in Sinaloa, Mexico, and came to the United States when he was 6 years old.
“I believe the most important thing we can do is to use the drivers through the company they work for as opposed to taking drivers up on their typical offer of driving you around independently,” Mr. Leon said.
“Not only is there record of your trip with the rideshare company but you also get the state minimum required insurance coverage. In an instance where you hire the driver outside of the service you may find that if an accident happens neither their personal coverage nor the rideshare company coverage will apply. Putting injured people in a situation where no coverage would be made available if an incident occurs.”
But how does car insurance exactly work for a taxi service? That’s where Mr. Leon’s expertise comes into the picture.
“In Arizona we have traditional taxi limousine and transportation network company vehicles like Uber and Lyft,” he said. “All of them must obtain a vehicle-for-hire permit, get yearly vehicle inspections, the drivers are required to do background checks and are presumed to be independent contractors. There is also a zero-tolerance policy for drug and alcohol use by drivers.”
Taxi, limousine and livery vehicles are required to have different insurance coverage than transportation network companies like Uber or Lyft, Mr. Leon explains.
“With taxi and limousines, a driver who is available to provide transportation is required to have the state minimum liability insurance coverage of $25,000 limit per-person, and a $50,000 limit per incident while maintaining a $20,000 limit for property damage.”
Mr. Leon explains depending on the type of vehicle, a consumer may not understand the risk he or she is taking when hailing that transportation service.
“In essence just because a taxi/limousine or Uber/Lyft vehicle is on the road doesn’t automatically mean you’ll have a lot of insurance available if a motor vehicle accident occurs,” he explained.
“Transportation network companies such as Uber and Lyft have three different stages of coverage. If the driver is logged in to the software application to be a driver the insurance coverage, they carry must be $25,000 limit per-person, with $50,000 limit per incident while maintaining a $20,000 limit for property damage. When they have accepted a ride request the coverage must be a minimum of $250,000 per incident.”
Mr. Leon points out when utilizing traditional transit options different coverage levels emerge in the insurance marketplace.
“When the taxi/limousine driver has accepted a ride request and is actively transporting they must have a minimum coverage of $250,000 per incident,” he explained. “They also must carry a minimum of uninsured motorist coverage of $25,000 per person and $75,000 per incident.”
Mr. Leon explains coverage will go up to $1,000,000 per incident when a passenger is occupying the vehicle. But what happens if a consumer is in a car accident while in a rideshare or traditional taxi service?
“Insurance companies will afford coverage differently depending on the facts of the situation,” he said. “An insurance company will investigate and confirm the stage the driver was in to determine how much money will be made available under the insurance policy.”
When asked what Mr. Leon thought was the most important thing to know when protecting yourself when taking advantage of the emerging rideshare technology.
“Consumers considering taking a ride with one of the companies above should consider the types of protections they are expecting,” he said. “One of the big differences that is surprising is the minimum coverage required with taxi, limousine and transportation network companies like Uber and Lyft. I think people don’t automatically think of what will happen if an accident occurs. We don’t want to think that way, but we should be cautious and instead of saving on the cost of transportation by hiring the driver directly we should consider the pitfalls/risk of having no insurance to protect us in an event of an accident.”
Learn more about Mr. Leon and his Phoenix law firm at leonlawpllc.com