Car Insurance a Central Issue in Nation’s Ridesharing Debate

What you need to know:

  • Rideshare services, sometimes called “Transportation Network Companies” (TNCs), are smartphone-based services that connect drivers with passengers, with the drivers using their personal vehicle to ferry passengers.
  • A big issue with these services is whether and how TNC drivers must to be covered by a commercial insurance policy while using their personal vehicles.
  • Many state insurance officials are advising drivers to tell their coverage provider before using their personal car for rideshare services.
  • Few states have concrete TNC regulations. California is making the most headway; officials are working out how drivers can switch back and forth between commercial and personal coverage.

LyftRidesharing services like Uber, Lyft, Sidecar and others are increasingly popular. But there’s also been increasing scrutiny.

Typically, these are smartphone-based apps that connect people who need a ride to drivers who take them to their destination.  But if that personal vehicle lacks the commercial coverage typically required of taxicabs and other ride-for-hire services, ridesharers could fall victim to a gap in coverage if there’s a crash.

Although major rideshare companies like Uber and Lyft began beefing up their insurance requirements last year, the industry has still drawn scrutiny from politicians, taxicab advocates, other transportation services and ridesharers themselves.

Different states are answering those questions in different ways. But if there’s a certain thing about this issue, it’s that it’s ongoing.

Common insurance-related questions have been raised by state officials who are grappling with how to regulate this budding industry: What type of coverage do ridesharers need? How much coverage is enough to protect riders and drivers? When exactly does that coverage kick in?

Online Auto Insurance News (OAIN) has covered the topic in California previously, in articles about rules set by regulators and pushback from the taxicab industry in the Golden State. More background can be found in our FAQ on the insurance implications of ridesharing.

Here’s a news roundup on a number of states and how the insurance side of ridesharing regulation is unfolding there.


Arizona’s governor vetoed an attempt by lawmakers to regulate TNCs in April, saying the regulations were too loose and didn’t include strong enough screening of drivers. She also said she was concerned about “gaps in insurance coverage.”

“The legislation does not require a TNC to provide commercial coverage for damage to the driver’s car, coverage for injuries suffered by the driver or property damage as a result of an accident,” Gov. Jan Brewer said in her veto letter.


TNCs in California are currently regulated by the California Public Utility Commission (CPUC), but the CPUC is looking to improve its regulations, and state lawmakers are looking to take over and put TNC regulation into law.

Current regulations from the CPUC require TNCs to provide at least $1 million in coverage per accident. The CPUC is currently considering changes that could beef up insurance-related regulations by requiring other types of coverage like medical payments and uninsured/underinsured motorist.

Meanwhile, the state Assembly unanimously voted to support a bill regulating TNCs, AB 2293. State legislators are currently on break until August, the same month that CPUC is set to vote on its latest regulatory proposal for TNCs.

Check back tomorrow when OAIN will have more on the CPUC meeting that was held on Thursday. The meeting attracted many TNC drivers, passengers, and their opponents, including representatives from the taxi industry. The CPUC will vote on its latest proposed TNC regulations in August.


In Illinois, legislators passed a bill in June to create ridesharing rules, but the bill, HB 4075, hasn’t yet been presented to the governor for further review.

The passage follows a public snafu in Chicago last month, when city officials told UberX that its drivers were barred from picking up passengers at Chicago airports. According to the Chicago Tribune, the rideshare company told its drivers that picking up passengers at O’Hare and Midway airports was allowed. However, city ordinances only permit licensed ride-for-hire services at airports. UberX lacks such a license.

New Mexico

New Mexico’s Public Regulation Commission issued an order to Lyft to stop its services there, sparking debate between the company and officials over whether or not those services can be considered taxi services. In a recent article from The Albuquerque Journal, John Franchini, the state’s insurance superintendent, said that personal auto coverage will come up short in the event of a crash.

“Under the personal auto insurance policy, their insurance company doesn’t even have to respond” to a driver’s claim, Franchini told the Journal. Franchini added that Lyft and drivers who use the application “aren’t violating the insurance law … they’re just not covered.”

State insurance officials also asked drivers to “exercise caution” when using the service and be aware of the car insurance implications.


The Division of Insurance issued a recent advisory in June warning rideshare passengers that “they may be driving with someone who is uninsured.”

According to the advisory, riders should ask drivers for “proof of commercial liability insurance before accepting a ride.” Personal auto policies will not cover damage or injuries that occur during ridesharing rides, which officials called “a commercial venture.”

Officials clarified that this didn’t apply to “traditional share-the-expense carpooling or ride-sharing arrangements” between friends, neighbors, or co-workers.

South Carolina

Drivers in Charleston, Greenville, Columbia and Myrtle Beach got access to the UberX app Thursday, according to The Post and Courier. Last month, state insurance regulators issued a consumer advisory about car coverage for rideshare services.


The Virginia Department of Motor Vehicles has fined drivers from both Uber and Lyft, according to media reports, and issued cease-and-desist orders to the two rideshare companies until rules can be legislated during lawmakers’ next session. However, Uber told the Hampton Roads Daily Press that it plans to “operate as usual” despite the DMV’s order.

Around the globe

The ridesharing issue isn’t confined to the U.S. In Europe, rideshare app Uber is drawing sharp rebuke from taxi drivers and the transportation groups that represent them.

Thousands of taxi drivers in London publicly protested Uber in July, part of a larger protest across Europe. Protests in major cities included Paris, Milan and Madrid, according to USA Today.

In Australia’s states of New South Wales and Victoria, official crackdowns on Uber services over the past two months resulted in fines against rideshare drivers and notices of possible legal action.

The Insurance Council of Australia told publication The Age that ridesharers should know that there could be severe financial repercussions if they’re involved in a crash while using the service. According to the publication, the Council said it was “unaware of any specific insurance products in Australia that covered ride-sharing.”

Photo courtesy of Alfredo Mendez

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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