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The Law According to Uber: How Uber Drivers Are Licensed and What This Means for Your Insurance Coverage

The following post is part of our Law Student Blog Writing Project, and is authored by Ian Fasnacht, a law student from Ohio State University Moritz College of Law.

For several years, Uber and other “ride-sharing” services have competed with traditional taxi and black car services across the country. Uber allows customers to “hail,” or request, a ride and for drivers to respond to requests made within their geographical area through Uber’s smartphone application. Uber’s popularity has raised legal uncertainty regarding license requirements and insurance coverage.

Do I Need a Commercial Diver’s License (CDL) to drive for Uber?

Uber offers a variety of commercially licensed services, including black car and taxi, but the average person who drives for UberX, an individual providing transportation with their personal car, does not need a CDL. However, some states have other licensing requirements.

Uber’s popularity has caused financial hardship on the taxi driving industry, which traditionally limited the number of taxis operating within city limits through a medallion system. Those with medallions were awarded exclusive street “hailing” – picking people up off the street for transportation purposes – rights.

At the moment, Uber has been winning the legal battle. States that have confronted the issue have rejected the notion that Uber directly takes revenue from taxi services because there has been no evidence that Uber customers would use a taxi instead of other forms of transportation, i.e. city busing, car pooling.

Additionally, the courts have upheld Uber’s argument that they are a technology company, supplying communication from consumers to drivers, and not a transportation company because Uber does not own, operate or maintain any of the vehicles; therefore, Uber is not bound by the transportation industries rules and regulations.

There is legal uncertainty whether Uber drivers will be required to obtain a commercial driver’s license in the future. Taxi drivers allege Uber drivers are able to compete at an unfair advantage because they are able to operate without obtaining a license or medallion and provide services for the same clientele. Additional lawsuits have been filed.

Some states do require ride-sharing services to have a license other than a CDL. For example, in New York City Uber drivers are considered “pre-arranged” transportation and must obtain a Taxi and Limousine Commission license, which requires some driver education.

If considering driving for UberX, consult your local DMV for requirements.

Whose insurance protects me if I am in an accident while driving for Uber, or riding in an Uber vehicle?

Individual auto insurance policies do not cover commercial use of vehicles. To fill this gap, Uber provides supplemental insurance. It works as follows:

When driving around with the Uber application turned off, drivers are covered by their own personal insurance. If the application is on, the driver receives supplemental limited liability insurance. Once a driver accepts a trip, the insurance amount increases to $1 million in coverage from the time the driver is en route to pick up the passenger until the time the ride is complete.

Uber’s website indicates the insurance provided is supplemental and all claims must first go through the driver’s personal insurance. If the personal insurance denies the claim, which it most likely will not, then they may file a claim with Uber.

However, claims through Uber insurance may be difficult to recover because Uber maintains that all drivers are independent contractors and not employees; therefore Uber is not responsible for the driver’s distractions. Lawsuits that have challenged Uber’s claim have been settled, and the issue does remain unclear.

Companies in several states have begun to develop cheaper commercial insurance policies for Uber drivers that supplement their personal policies. Similar to license requirements, divers should verify with their state if additional insurance is required and with their insurance company to determine if driving for Uber will be covered by their current policy.

Have you been injured while riding in an Uber or while driving for Uber? If so, call Lawrence & Associates and ask for a free consultation with one of our attorneys! We’re Working Hard for the Working Class, and we want to help you.