Driving for Uber can have significant consequences. Below is a summary of potential liability issues, and a possible alternative for your consideration.
Uber Liability Issues:
Personal car insurance (“PCI”) does not cover commercial use of your personal vehicle. This includes transporting passengers for a fare (i.e., working as an Uber driver). If you are an Uber driver, when the Uber app is on and you have a passenger in your car, you should be covered by Uber’s insurance, but your PCI does not apply. Note that there is a gap in coverage.
This leads to two major problems.
1. Amount of Coverage. Uber considers itself a “technology company” rather than a taxi service, so as a general policy Uber feels that it should not be liable for anything that happens to its drivers. What does that mean? We cannot be sure as to how much their insurance covers, and if there are circumstances under which Uber insurance will not cover you (the driver).
2. Timing of Coverage. As soon as you turn on the Uber app, your PCI no longer applies. But Uber’s insurance does not kick in until you pick up your passenger. This gap in insurance coverage creates a major liability issue for you. Currently in New Jersey, the only option to cover this insurance gap is to obtain a commercial liability insurance policy. These are both difficult and expensive to get, since insurance companies are hesitant to insure individuals for such large amounts.
Unless you are able to get a commercial liability policy, you will face a lack or uncertainty of insurance coverage.
As an alternative, you can start an independent livery service, but there are a number of steps involved at the local, state, and federal levels to ensure you are in compliance with all laws. We would also recommend that you form a new LLC to limit your personal liability. The total filing fees for this can easily be $800, depending on local requirements.
In addition to the above registration requirements, you would also need to have a commercial liability policy before your livery service could start operations. As mentioned above, it can be a challenge to get insurance as an independent commercial driver, and the premiums tend to be high.
This may not be a good alternative if you expect this to be a part time endeavor—the expenses can outweigh the benefits. However, it is a way to limit liability. Again, the decision is yours.
If you decide to go this route, we can help with that process in greater detail.