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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

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

July 15, 2020 Anthony Gramuglia Car Accident

Vehicular accidents come hard and fast, but even when the momentum of the situation hits you, there’s at least that calming voice in your head that tells you “At least I have insurance.” However, what happens if you’re the passenger of an Uber or Lyft car or a pedestrian struck by one of these vehicles? When an accident happens as a result of the negligence of an Uber or Lyft driver, the insurance issues involved differ greatly from a normal auto accident.

It is critical to ensure your medical bills are covered and that you receive maximum compensation in the event of an accident caused by negligence on the part of a driver for a network transport company vehicle. New Jersey legislature passed a special law in 2016 regarding transportation service vehicles such as Uber or Lyft. The law, currently under development, will be interpreted by the courts. As a result, the insurance coverage issues will vary depending on whether the Uber or Lyft driver either has a passenger, has agreed to accept a ride, or is just driving while off the digital network.


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, as well as vehicles for 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. This new law, in part, defines a “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 a “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.

In other words, the ride begins as soon as the driver accepts a passenger’s request for a ride, not when the driver picks up their passenger. This is significant. Because of the mandatory insurance requirements imposed on drivers (as discussed below), if an accident occurs before picking up their rider but after accepting the rider’s request, higher coverages of insurance would be available for someone injured by the driver. For example, if an Uber driver accepts a request, speeds to a parking lot, and accidentally collides into your car before picking up the rider waiting by the curbside, you will be qualified to receive a higher coverage of insurance, since, technically, the ride started.

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 nor is on-route to pick up 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.

One massive benefit for those injured in 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. Therefore, 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 driver.

Where the driver’s Uber or Lyft application is not on so that the driver is not actively seeking a passenger, the new insurance requirements do not apply. Rather, 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 aforementioned definitions, the ride starts once the driver accepts the ride, which means the higher insurance coverages will be applicable. This carries with it huge implications for someone hurt by the negligence of a transportation network driver.


Additionally, the new statute in New Jersey requires a criminal background check on any driver for a transportation network 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 keep and maintain digital records of every ride that driver has conducted.

The insurance requirements imposed upon transportation network companies and drivers are significant, especially when a passenger is in the car. 1.5 million dollars for coverage in liability and uninsured/underinsured coverage is significantly higher than required for other vehicles under the NJ Motor Vehicle Security-Responsibility Law. These new insurance coverages rules put Uber and Lift accidents in a unique position. 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 of every specific incident and under what circumstances.


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. Critical issues that need to be determined in each case include how the accident occurred and whether the driver is logged into the transportation company network and/or has accepted a ride. 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?

The new law requires that a background check on any new drivers be conducted. However, fingerprinting new drivers 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. In addition, transportation network companies are required to check their driving record.


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 maintains 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 independently maintain the minimum coverages of $1,500,000 for death, bodily injury, and property damage, along with underinsured and underinsured motorist coverage in the amount of $1,500,000.


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

Uber, 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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