Lyft, Sidecar and Uber: Great Service But Lots of Legal Issues

Have you seen cars driving around Nashville decked out with a fuzzy pink mustache? The pink mustache is the logo, if you will, for Lyft, a ride-sharing service. Lyft, Ubert and Sidecar all operate in much the same manner.  For Lyft, individuals who need transportation can summon a driver by using their phones — the companies have apps for their services. A pre-screened driver then picks up the individuals and takes them to their destination. The driver does not charge a fare but instead takes a "donation." The cost associated with these types of ride-sharing services has been estimated to be 30% less than a traditional taxi, which is wonderful for the consumer.

But there are some questions related to these services. While these ride-sharing services are quasi-taxis, they are not currently subject to a number of regulations applicable to taxis and limousines. For instance, the drivers do not have to have chauffeur licenses. While the vehicles must be a 2000 model year or later, the vehicles are not subject to inspections. Unlike Nashville taxis, there is not presently a requirement that they be licensed by the city’s Transportation Licensing Commission.

And then there is the issue of liability and insurance. Lyft’s website indicates that it does criminal background checks and Department of Motor Vehicle checks for all of its drivers. These checks are designed to weed out drivers who have been convicted of a DUI, a violent crime, etc. Lyft also requires its drivers to have the state minimum in insurance coverage and then Lyft has its own, additional $1,000,000 liability coverage. 

But, what is not clear from Lyft’s website is how the coverage applies. For instance, does the coverage apply only if the Lyft driver is transporting passengers? Or does it also apply while the driver is driving around in between jobs? If the Lyft driver hits a pedestrian, does the insurance coverage apply? Are the drivers independent contractors or does Lyft bear vicarious liability for the driver’s actions? If Lyft fails to properly screen a driver, is Lyft independently liable? Are Lyft drivers common carriers which means they are held to higher level of responsibility when transporting passengers?

Some of these questions will be controlled by the terms of Lyft’s insurance policy. And others will have to make their way through the court system to get solid answers. For now, some states are beginning to exercise greater scrutiny over these ride-sharing companies. For instance, California has already begun to regulate ride-sharing companies with vehicle inspections, insurance requirements, licensing and more. Arizona and Illinois currently have legislation pending.

As Nashville continues to grow, so does the need for better transportation options and these ride-sharing programs may be a great solution. But, as a consumer, you should be aware of these liability and safety issues. And you should also know how your own insurance policy applies to these situations. 

If you are involved in an accident with Lyft or some other ride-sharing company, one of our award-winning lawyers would be happy to discuss your case with you in a no-fee, no-obligation consultation. For more information on our fees and costs, click here. Then, call us anytime at 615-742-4880 or toll-free at 866-812-8787 or simply fill out this online form to schedule an appointment.