Virginia agency seeks to shut down ride share apps on liability concerns

The sharing economy is expanding from renting a spare bedroom to offering a ride in your car. Startup companies may operate on legal fringes. For instance, the mobile rideshare apps Uber and Lyft may not have the proper liability insurance to cover passengers in Virginia auto accidents.

On Uber, for instance, a passenger can book a ride by sending a text or using the mobile app. The app even allows the customers to track the location of their reserved car.

In June, the Virginia Department of Motor Vehicle sent both Uber and Lyft cease and desist letters. In effect, each company must stop their operations in Virginia or their part-time drivers will face fines. Earlier in the year, the DMV fined both companies for continuing operations after warnings.

Liability insurance may not cover paying passengers

In Arlington County, police were looking for the car-sharing companies after the cease and desist order. Still a local news station had no problem ordering a ride through Uber. The companies continue to do business even as the DMV says they are illegal and do not have the proper authorization to operate in Virginia.

While the company has been trying to resolve regulatory issues with the state, those that use the services need to be aware of possible liability concerns.

In Virginia, a basic auto insurance policy does not provide coverage if the vehicle is used as a livery service. For a part-time UberX driver's policy to cover use as a taxi service, a driver would need to pay additional premiums.

Lyft does address insurance concerns and allows a rider to purchase a Lyft Insurance Protection Plan for an additional cost. The company website explains that the policy offers up to $1 million in liability coverage above the driver's personal insurance.

Uber states that its drivers are required to carry state minimums. In Virginia, to buy license plates or decals, an individual needs to show that the vehicle has minimum insurance. The minimum requirements are currently:

  • $25,000 for injury or death to one person
  • $50,000 for injury or death to two or more individuals
  • $20,000 in property damage

These minimums may not go very far in an injury accident. If commercial use of a personal vehicle voids out even the base liability insurance coverage, the driver may not even have this protection.

Uber does not appear to provide company insurance over and above a driver's policy. This could be a similar situation to an uninsured/underinsured motorist accident. It may be difficult to sue Uber, because technically the driver is liable for damage resulting from the failure to have a commercial insurance policy. Drivers may not have the resources to pay for damages caused in an accident.

If you suffer a serious injury in an auto accident while using a ride-sharing service, contact an experienced personal injury attorney to discuss liability issues. In addition, when in a crash with an uninsured or underinsured Virginia driver, it is also important to seek the assistance of a lawyer.