Should You Use Ride-Sharing Apps?

Posted on August 9, 2016

An interesting new ride-sharing/carpooling/taxi service is emerging in the form of apps that can be used to help you find a ride from point A to point B. It’s a very innovative idea, but as a personal injury lawyer, I can’t help but look at this from a liability perspective. This new phenomenon reminded me of the old ride board that we had at college where students would put a note on a bulletin board so you could get a ride home for the holidays. This is basically a sophisticated form of hitch-hiking. One of the apps is called Side Car. The FAQ page on their website says:

“SideCar instantly connects people with extra space in their cars with those who need to get from one place to another. Like a quick and hassle-free carpool, SideCar offers an easy, safe, reliable, and completely donation-based way to get from here to there.”

So, basically anyone can sign up to be a driver and people who need rides can get connected with you and if you have space in your car, you can give them a ride. Payment is “voluntary,” but the app provides a community average “which shows you how much others are paying for rides of similar durations and distances.” As far as screening drivers, SideCar says:

“Not only must all community drivers have a valied driver’s license, insurance and a good car in working order, but we also run background checks, conduct interviews and use GPS technology to track the progress of every trip.”

OK, let’s hold it right there and do some legal analysis. First, how much liability insurance must the driver carry? It’s not enough just to have insurance. Would it be OK for the driver to carry Utah’s minimum liability limits of $25,000 per person/$65,000 per accident? I think not. Personally, I wouldn’t advise anyone be a SideCar driver unless they had at least $1 million in coverage.

Second, would your insurance even cover you if you caused an accident? I have big concerns about this. Here’s another quote from SideCar’s FAQ page:

“Do I need special insurance? SideCar requires community drivers to carry liability insurance coverage as mandated for all drivers by the state in which they drive. No special insurance coveage is needed for carpool/rideshare use of your vehicle. Please contact your insurance company if you’d like more information.”

Apparently SideCar doesn’t think insurance coverage is an issue. If you’re operating a defacto taxi service using your personal vehicle, your insurance company is going to have an issue with providing coverage. When providing you with liability coverage your insurance company did not contemplate that you would be giving people rides and charging fares, even if it’s considred a voluntary donation.

Third, let’s assume you cause an accident while acting as a SideCar driver. Are you an employee or agent of the company? Are you an independent contractor? There are lots of factors to weigh and analyze when determining whether a negligent party is an employee acting within the course and scope of his employment with the company. Often companies will characterize employees as independent contractors in order to excape liability, taxes, insurance, etc. In the event of an accident I’m sure SideCar would characterize you as an independent contractor. However, this is also going to be a fuzzy issue. Under Utah law we would need to look at how much control SideCar exercised over the driver. We know that SideCar is arranging the ride through their apps. They are also tracking you using GPS. Finally, they are vetting you by performing background checks and verifying you have a current driver’s license. They are providing their stamp of approval that you are a safe driver.

I anticipate a lot of litigation will occur invovling these issues. However, SideCar isn’t the only company signing up amatuer volunteer “taxi” drivers. There’s also Zimride and Lyft. Zimride uses social media, like Facebook, to find carpooling buddies. PayPal is used to pay for your ride. Here’s a video from Zimride explaining how it works:

From what I can see, Lyft is the only one of the three that provides excess liability insurance for its drivers. From the Lyft website:

“The Lyft platform provides drivers with excess liability insurance up to $1,000,000 per occurrence through an A++ rated insurer. This first-of-its-kind solution offers peace of mind for both drivers and passengers.”

Lyft also requires a vehicle inspection and only allows model years 2000 or newer. Drivers are also given a rating by the passenger and if your rating drops below a certain level, they are “removed from the Lyft community.”

Again, I think these are three very interesting and ingeneous products that have a lot of potential benefits. However, just be aware of the possible liability and insurance issues. If you have experience using one of these services I’d love to hear about it. Likewise, if you would like to more fullly understand your legal rights in regards to these ridesharing/carpooling/taxi services, call us at Handy & Handy at 801-264-6677.