In a May 7 statement Uber’s Global Head of Driver Communications Alix Anfang told Flexible Work News that California’s liability insurance requirements for ridesharing companies are significantly higher than those for personal vehicles.
"All 50 states require that people who drive on the Uber platform have commercial insurance coverage - which Uber covers on the drivers' behalf," said Anfang. "Commercial insurance requirements for TNC (‘transportation network companies' or ridesharing companies) are many times that of any other car on the road. For example, in California, the $1 million liability coverage requirements imposed on Uber and other TNCs are currently more than 30x that of personal vehicles on the road. It's far higher than taxi -- 10x taxi requirements in LA and San Francisco (taxi requirements change from city to city)."
According to the California Department of Insurance, a law enacted in 2015 mandates rideshare companies to provide $1 million in liability insurance coverage for their drivers.
Uber driver Cameron Weir pointed out that many attorneys are aware of the required million-dollar liability policy for rideshare companies. As a result, they perceive accidents involving rideshare vehicles as "a potential million dollar payday," according to Politico. Weir experienced this firsthand when his car was rear-ended while driving two passengers in Santa Monica. Despite being "clearly not at fault" for the accident, he was taken aback to discover that the passengers were suing not only the driver who hit his car but also him and Uber.
The Northern California Record suggests that excessive litigation is causing insurance costs to rise for all policyholders. Insurers are compelled to increase prices to cover the heightened risk costs. These escalating insurance costs are particularly affecting low-income Californians who are already dealing with high inflation. Car insurance costs surged by 24% last year and are projected to rise another 7% in 2024. Consequently, low-income families in California are struggling to afford basic expenses.
Bob Passmore, Vice President of Policy Research International at the American Property Casualty Insurance Association, said that rising car insurance costs are impacting California residents regardless of whether they own cars or use rideshare services, according to Politico. Passmore stated, "These kinds of issues affect you whether you own a car or not or whether you rely on Uber exclusively for your transportation. The same thing is true if you own your own car and buy auto insurance. One way or another, it's going to affect you." He further added that increased auto insurance costs can get passed on to customers who use rideshare or other transportation services.
Backlinko reports that 3.5 million individuals drive for Uber globally. The leading rideshare platform is available in 10,000 cities and has 93 million customers.