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Insurance Law Covering Accidents Involving Uber And Lyft Drivers and Passengers in NJ

October 8, 2019 John J. Scura III


Accidents involving Uber or Lyft and the insurance issues involved are much different from normal auto accidents especially where you are the passenger in the Uber or Lyft car, a pedestrian struck by one of these vehicles, or driving another car and injured as the result of the negligence of an Uber or Lyft car.  In New Jersey the legislature passed a special law in 2016 regarding transportation service vehicles like Uber or Lyft.  That law is currently developing and will be interpreted by the courts.

Making sure your medical bills are covered and that you receive maximum compensation in the event of an accident caused by the negligence of a driver of a network transportation company vehicle is critical.   The insurance coverage issues depending on whether the Uber or Lyft driver has a passenger or has agreed to accept a ride versus just driving while off of the digital network will vary greatly.

The Definitions of Transportation Network Companies, Drivers and Riders Are Critical Regarding Insurance Issues

New Jersey has passed a new law covering Uber and Lyft cars and other similar transportation network companies. New Jersey’s new statute is entitled the “Transportation Network Company Safety and Regulatory Act.” N.J.S.A.39:5H-1. The new law, in part, defines “Transportation Network Company” as a corporation, partnership, sole proprietorship, or other entity that is registered as a business in this State or operates in this State, and uses a digital network to connect a transportation network company rider to a transportation network company driver to provide a prearranged ride.” N.J.S.A. 39:5H-2. The new law also defines “prearranged ride” as the provision of transportation by a transportation network company driver to a transportation network company rider, beginning when a driver accepts a ride requested by a rider through a digital network controlled by a transportation network company, continuing while the driver transports a requesting rider, and ending when the last requesting rider departs from the personal vehicle.” N.J.S.A. 39:5H-2.

Thus the ride starts as soon as the driver accepts the request and even before the transport begins.  This has significant meaning based upon the mandatory insurance requirements imposed on drivers as discussed below because if an accident occurred before getting the rider but after acceptance of the request, higher coverages of insurance would be available for someone injured by the driver. For example, when you open that uber app requesting a ride and the driver accepts your request, the higher insurance coverages kick in and the ride technically begins. 

The law defines “transportation network driver” as a “person who receives connections to potential riders and related services from a transportation network company in exchange for payment of a fee to the transportation network company, and uses a personal vehicle to offer or provide a prearranged ride to a rider upon connection through a digital network controlled by a transportation network company in return for compensation or payment of a fee.”  N.J.S.A. 39:5H-2

Finally, the law defines “transportation network company rider” as a “person who uses a transportation network company’s digital network to connect with a transportation network company driver to receive a prearranged ride from the driver using the driver’s personal vehicle.” Under these definitions, services such as Uber or Lyft are clearly covered by the new law and would be classified as transportation network companies. N.J.S.A. 39:5H-2.

Insurance Requirements for Uber/Lyft Type Companies

Under the new statute, there are different requirements for minimum coverage depending on whether the driver has a passenger in the car or is just logged into the transportation company’s network waiting for a passenger.  If the driver has a passenger, the following mandatory insurance is required:

  1. Liability insurance in the minimum amount of $1,500,000 for death, bodily injury, and property damage;
  2. Primary insurance for medical payments in an amount of at least $10,000 per person per accident, which shall only apply to and provide coverage for the driver; and
  3. Underinsured and underinsured motorist coverage in the amount of $1,500,000.

If the driver is just logged into the company network, but does not yet have a passenger, the following coverage is required:

  1. Primary automobile liability insurance in the amount of at least $50,000 for death or injury per person, $100,000 for death or bodily injury per incident, and $25,000 for property damage;
  2. Primary personal injury protection benefits that provide coverage amounts required under N.J.S.A. 39:6A-4. Please note that this provision of the new law leaves a wide range of coverages from $15,000 to $250,000 and is not clear. Our firm believes the Legislature should require at least $250,000 in personal injury protection benefits.
  3. Uninsured and underinsured motorist coverage to the extent required under N.J.S.A. 17:28-1.1.

A huge benefit for those injured in such accidents caused by a transportation network company driver is that the driver cannot raise the lawsuit or verbal threshold option defense by a person injured.  Thus, if you have the verbal or lawsuit threshold option under your own insurance policy and would normally have to prove a permanent injury to recover, you do not have this legal barrier to recover against a negligent Uber or Lyft type driver.

Where the driver’s Uber or Lyft application is not on so that he or she is not actively seeking a passenger, the new insurance requirements do not apply and the driver’s own personal insurance policy must cover damages.  An interesting issue will arise when the driver has accepted a ride but the passenger is not yet in the car.  Based on the definitions described above, as soon as the driver accepts the ride but the rider is not in the car yet, the higher insurance coverages should be applicable.  Whether the higher or lower insurance is applicable will have huge implications for someone hurt by the negligence of a transportation network driver.

In addition, the new statute in New Jersey requires a criminal background check on a driver. If the transportation network company fails to conduct a criminal background check on a driver, that company could be liable for any damages or injury caused by bad acts on the part of the driver. The company must also conduct a driver’s background check on any driver hired by the company. The company must also keep and maintain digital records of the rides.

The insurance requirements imposed upon transportation network companies and drivers are significant especially when a passenger is in the car. 1.5 million dollars in coverage for liability and uninsured and underinsured coverage is significantly higher than required for other vehicles under the NJ Motor Vehicle Security-Responsibility Law. These new insurance coverage rules make an Uber/Lyft accident unique. As the law develops and is interpreted by the courts, legal issues will arise as to the coverages that apply and who is ultimately responsible for the damages.

New Jersey Attorneys that Understand the New Law Covering Uber or Lyft

Our firm has studied and is continuing to monitor the court’s interpretation of the new statute governing transportation network companies. How the accident occurred and whether the driver is logged into the transportation company network or has accepted a ride are critical issues that will need to be explored in such cases.  If you or someone you know has been involved in an accident involving an Uber or Lyft car, please call one of our licensed New Jersey lawyers.

Frequently Asked Questions Regarding Uber/Lyft or other Transportation Network Companies

Under the new law, are transportation network company drivers required to have fingerprinting conducted?

closeup-of-fingerprint-on-paperThe new law requires that a background check on any new drivers be conducted but fingerprinting is not required. Fingerprinting is, of course, a more thorough check and our firm believes New Jersey should require it, but it was not included in the new law.

The current background check only requires prospective drivers to submit their Social Security number, driver's license, and insurance information. Their driving record is also checked.

Does a transportation network company such as Uber or Lyft have to provide information on drivers to a rider?

The new law requires that the transportation network company maintain on “its website or digital network a picture of the transportation network company driver” providing the ride along with “the license plate number of the driver's personal vehicle that is to be used to provide the prearranged ride prior to the rider entering the driver's personal vehicle.” N.J.S.A. 39:5H-8

If I am injured in an accident and the Uber or Lyft driver is not carrying insurance am I covered?

Even if an Uber of Lyft driver let their insurance lapse, the companies must also maintain the minimum coverages of $1,500,000 for death, bodily injury, and property damage and underinsured and underinsured motorist coverage in the amount of $1,500,000.

Do Uber and Lyft have to keep data from the ride?

texting-on-smartphone-GXV72LZUber, Lyft or any Network Transportation Company have entered into a "memorandum of understanding" with the state Department of Transportation concerning the submission and collection of data from prearranged rides.

If I have chosen the lawsuit or verbal threshold and am injured due to the negligence of an Uber or Lyft driver, do I have to prove a permanent injury to recover?

No. A transportation network company driver cannot raise the lawsuit or verbal threshold as a defense to a lawsuit or claim of someone injured. Thus, even if you have chosen the lawsuit or verbal threshold you do not have to prove a permanent injury in order to recover as the result of the negligence of a transportation network company driver.

Free Consultation for Uber or Lyft Accidents

Our firm offers a free consultation if you are involved in an accident with an Uber, Lyft or other network transportation company driver. Please feel free to contact our firm for a detailed discussion as to the issues surrounding your accident. Even if you are hesitant to come in for an appointment, at least speak to one of our New Jersey attorneys to see if you have a claim. You will be directed to an attorney Certified by the Supreme Court of New Jersey as a Civil Trial attorney.

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John J. Scura III

John fights hard for his clients and tries to educate them so they understand what is going on with their particular legal problem. John has been Certified by The Supreme Court of New Jersey as a Civil Trial Attorney. Whether it is a personal injury case, bankruptcy case, litigation case or other type of matter, John wants his clients to participate in the decision making process toward solving their problem in the best way possible.

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