California

New Insurance Product Announced Meant to Close Gap For Drivers and Ridershare Companies

With Wednesday's announcement, the new product would only cover the time the driver is waiting to match with a passenger.

A new insurance product to help close the gap in coverage for drivers driving for ride sharing companies, such as UberX, Lyft and Sidecar was announced Wednesday afternoon.

Insurance Commissioner Dave Jones and Farmers Insurance CEO Jeff Dailey announced the new product that would be available to consumers May 28 through Farmers agents.

"Closing the insurance gaps in ride-sharing coverage is essential to making sure passengers, other drivers and pedestrians are protected when rideshare vehicles are on the road," Jones said in a news release. "I'm pleased to see Farmers, one of California's major insurers, offer a product that closes the coverage gap."

During a June 2014 report, NBC4's I-Team uncovered hidden dangers of riding with ride-sharing services, including riding at your own risk.

At the time, Uber told NBC4 in an email, "All we require for your uberX is your basic auto insurance." Uber will "provide you with a complete policy to supplement your own personal auto insurance."

This was not the case according to a driver and passenger who were involved in a crash in September 2013. Jason Herrera, was a passenger in an UberX driver's car when it slammed into another car. Herrera said he was badly injured and UberX suggested he contact the driver's personal insurance company for compensation rather than the rideshare company handling the claim.

The driver in the crash was also at a loss. His personal insurance would not cover the damages to his vehicle as it was used for commercial uses. Most personal insurance policies do not cover losses when the vehicle is used for compensation for rideshare services.

Even though Uber's website stated it carried a $1 million liability coverage per incident and it would act as the primary insurance if the driver's policy was not available for any reason, Herrera and the driver both said that was not the case.

Uber claimed Herrera chose not to work with its insurance and instead filed suit.

Herrera said he could not get the company to help him, so he decided to sue.

With Wednesday's announcement, the new product would only cover the time the driver is waiting to match with a passenger, according to Dailey. It does not include the time the driver is driving to the match or when he or she is carrying the passenger(s).

Uber's website states, " From the moment you get into any Uber product (e.g. uberX, UberBLACK) to the moment you're dropped off, your ride is covered by commercial liability insurance. That goes for every trip in every city around the world."

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