Rideshare and Food Delivery Insurance in New York - What You Need To Know

By Rosa M. Feeney, Esq

Rosa M. Feeney, Esq, brings to Lewis Johs Avallone Aviles, LLP over 28 years of experience handling a variety of complex insurance coverage litigation matters. Her experience includes construction, Labor Law and commercial insurance litigation, with a focus on risk assessment and management and the most effective means of risk allocation through contract review and insurance coverage analysis. She also handles first and third-party commercial and personal lines property damage insurance disputes, homeowners, motor vehicles, supplementary uninsured/underinsured motorist litigations and arbitrations, life insurance disputes, professional liability claims, and extra-contractual claims. She also has experience in general contract litigation and has also drafted and orally argued appeals in the New York State and Federal Appellate Courts.

Now more than ever, people are using food delivery services, such as Uber Eats, Instacart and DoorDash. In fact, as a result of the Covid-19 pandemic, revenue from Uber’s food delivery business has surpassed its ride-hailing counterpart. However, companies such as Uber and Lyft continue to compete for their market share in the rideshare industry and all of these services have led to the evolution of new lines of insurance, to cover the various scenarios encountered when a vehicle is being used in those types of businesses.

Uber and Lyft have recently updated their insurance information which differs from what was previously reported by them, just earlier this year. While this column focuses on New York law, we urge anyone handling these types of accidents in other States, to review their particular State’s requirements. In March of 2020, Uber announced that it has teamed up with certain insurance carriers to provide coverage for its drivers and riders and this differs State to State. Uber provides a color-coded map of the United States and designates the particular insurer that provides the insurance for that State. You can also download the Certificate of Insurance on both the Uber and Lyft website for the particular State you are inquiring into.

As a review of New York insurance requirements, New York’s Vehicle and Traffic Law (VTL) requires every owner of a motor vehicle to maintain minimum levels of insurance. Currently New York’s VTL requires $25K per person and $50K per accident of liability coverage for injury to third-parties, Uninsured Motorist Coverage in the same amounts and Personal Injury Protection (No-Fault) of $50K. Collision and Comprehensive coverage may also be secured under a personal auto policy for damage to the vehicle itself, however, this coverage is not mandatory.

The insurance needs of a rideshare vehicle differ from the typical taxi or livery in that the rideshare driver is usually operating a personal vehicle, which is used for both the rideshare business and for personal use.

However, if an accident occurs while the rideshare driver is engaged in providing rideshare services in his or her personal vehicle, the driver’s personal auto policy may not provide coverage. Use of a personal auto as a taxi or livery vehicle is typically excluded in a personal auto policy by a “livery exclusion.” Therefore, the rideshare driver obviously needs supplemental coverage in order to cover any gaps.

In response to this dilemma, the insurance industry has come up with products to cover the rideshare risk and has developed different coverages based upon the stage of use of the vehicle.

You can imagine that whether a driver is using the vehicle for the rideshare business or personal use could change in an instance and deciphering what the driver was doing at the time of the accident could be problematic. Therefore, the insurance and rideshare industry have come up with a system, where the types of insurance available for these rideshare drivers is entirely dependent upon on the stage of the use of the rideshare application, commonly referred to as an App.

The driver of the vehicle downloads the rideshare App, for example the “Uber Driver” App and logs in to receive the identity of potential customers waiting to be picked up or who want food delivered. The phase of use of the App will dictate what coverage applies to protect third parties, the driver, owner and occupants of the rideshare vehicle.

When a rideshare driver has the application off and is presumably using the vehicle for personal use, the driver’s personal auto policy should apply to cover any accident. However, once the App is on, the driver’s personal insurance policy, which typically contains a livery exclusion, precludes coverage for the accident.

Article 44-B of the New York VTL, sets forth the financial responsibility requirements for “Transportation Network Companies” known as “TNC’s.”

In accordance with New York’s VTL, drivers of the rideshare vehicle are called “Transportation Network Company Drivers” or “TNC Drivers.”

As of October of 2020, the Uber Newsroom and Lyft Insurance and Accidents pages advertise limits of insurance, however, when you dig in to the specifics of New York, the coverage differs.

In New York the Uber Certificate of Insurance provides:

Pursuant to policy terms and conditions: A. "Transportation Network Company Driver" means an individual who is operating a motor vehicle in connection with the use of the "Digital Network". B. Covered autos are passenger autos while being used by a "Transportation Network Company Driver" in connection with the "Digital Network" accessed using account credentials issued under a contract with a Named Insured to provide transportation services provided the "Transportation Network Company Driver" is logged into the "Digital Network" and available to receive requests, or following the "Transportation Network Company Driver's" recorded acceptance in the "Digital Network" and while en route to the pick up location of the requested transportation services, or traveling to the final destination of the requested transportation services, including but not limited to dropping-off of passengers. Uninsured / Underinsured Bodily Injury included as further described in the policy.

The policies now provide a combined single limit of $1,250,000 in bodily injury and property damage coverage per accident.

Uber explains Contingent Comprehensive and Collision insurance as follows: “As long as a driver maintains comprehensive and collision coverage on his/her personal auto insurance, the insurance that Uber maintains will kick in and provide physical damage coverage for the driver’s car up to its actual cash value, regardless of who is at fault. There is a $1,000 deductible that the driver must pay first before this coverage applies.”

Uber and Lyft rides in New York City are regulated by the NYC Taxi and Limousine Commission, which requires commercial insurance policies for each individual vehicle. Accidents that happen on rides originating in New York City are covered by those commercial policies that are maintained by the driver and are not provided by Uber or Lyft.

The insurance industry has adopted 4 “Periods” that govern the different types of available coverage. “Period 0” refers to when the App if off. Once the rideshare App is on: “Period 1”, “Period 2” and “Period 3” coverage applies. The three periods are as follows:

Period 1 is when the Uber App is on and the driver is waiting on a request to pick up a passenger.
Period 2 is when the driver has accepted the request of a passenger and is on the way to pick up the passenger.
Period 3 is when the passenger is in the vehicle and ends when the passenger exits the vehicle.

The facts of each case must be reviewed to determine which “Period” the risk falls under and which policy will apply. The rideshare companies can provide a driver log which identifies the applicable Period at the time of the accident.

Lyft currently provides $75K per person/$150K per accident and $25K for property damage for Period 1 and $1,250,000 liability limits for Period 2 and 3, Uninsured Motorist and also provides Contingent Comprehensive Coverage with $2,500 deductible.

A review of the particular policies for these rideshare vehicles is imperative to get a comprehensive understanding of the applicability and any priority of coverage issues with other available insurance.

There are options available in the market to supplement the rideshare coverage provided by Uber and Lyft, which can be purchased by the TNC Driver. This is an area to explore if you are involved in any case involving a rideshare vehicle and need to identify all available coverage for the accident.

Therefore, in analyzing coverage for rideshare vehicles, you must identify the stage of the use of the vehicle and the availability of any other coverage.

While you would think the rideshare insurance requirements would extend to Uber Eats, Instacart, DoorDash, Grubhub, Postmates, etc., (Food Delivery Apps), coverage for drivers involved in delivery of food for those companies differs from their rideshare counterpart.

Despite its similarity to the rideshare business, Food Delivery Apps are not subjected to the same New York regulations and may not have any available coverage in some circumstances.

Food Delivery App services do not fall under the definition of TNC under the New York Vehicle and Traffic Law.

“Transportation Network Companies” are defined in New York’s Vehicle and Traffic Law as “a person, corporation, partnership, sole proprietorship, or other entity that is licensed pursuant to this article and is operating in New York state exclusively using a digital network to connect transportation network company passengers to transportation network company drivers who provide TNC prearranged trips.” VTL § 1691 (3).

There is no mention in the VTL § 1691 of food delivery services.

Importantly, New York Insurance Law permits an exclusion in a personal auto policy for use of a vehicle as a “public or livery conveyance” (the livery exclusion discussed above). In order for the vehicle to be deemed a “public or livery conveyance,” goes beyond whether the driver was paid for the transport or received a fee. The vehicle would need to be used indiscriminately in carrying goods for hire. Limited special use of the vehicle for transporting goods does not make the vehicle a livery conveyance.

Historically, New York Courts have rejected the use of the standard livery exclusion in a personal automobile policy to exclude coverage for drivers making food deliveries, such as pizza delivery, in their personal vehicles. The caselaw in this area is, however, very fact dependent.

So, if a food delivery service driver occasionally delivers food through these Food Delivery Apps, would that be deemed use as a “public or livery conveyance”? This is an area that is developing, and only time will tell whether those Food Delivery services will be considered a public or livery conveyance or whether they will be regulated just as the rideshare services.

Uber maintains insurance on behalf of delivery partners operating on the Uber Eats App, this insurance, however, does not apply to New York. In fact, the Uber website is silent as to the New York insurance requirements for the Uber food delivery service. Therefore, in New York, Uber Eats requires that the driver purchase commercial insurance.

Below is a summary of the insurance available for a few of the other Food Delivery Services:

Grubhub and Instacart do not appear to provide any insurance.
DoorDash has a commercial auto insurance policy that covers up to $1,000,000 in bodily injury and/or property damage to third parties arising out of accidents while on an active delivery. To qualify as “on an active delivery” the driver must be in possession of the goods to be delivered. However, the DoorDash insurance is excess to the driver’s personal insurance policy. The website says “This excess insurance applies only after you go through your own auto insurance policy first. If you fail to maintain your own insurance, DoorDash's coverage may not apply.”
Postmates does provide excess coverage for third-party property damage and/or third-party bodily injury if the driver’s personal policy does not provide coverage or if the diver’s policy does not adequately cover damages. However, the driver must be on an active delivery, which Postmates defines as “after you have selected ACCEPT on the platform through and until the customer receives their order as logged by the Postmates platform.”

Therefore, with DoorDash, if the driver is logged into the system and is going to pick up food and is in an accident, the DoorDash insurance will not apply. If the DoorDash driver’s personal auto carrier denies coverage based upon the livery exclusion, that driver may be left without insurance coverage.

With Postmates it appears that the company will provide coverage if the driver’s personal auto policy does not cover the loss, however the driver must have selected to accept the delivery on the platform.

Therefore, while the rideshare industry has come under the grips of New York regulators and the New York Vehicle and Traffic and Insurance Law, the food delivery services have not and may leave those drivers and possibly innocent third-parties at risk of having no insurance at all if the personal auto carrier denies the claim based upon the livery exclusion.

It does appear that some insurers are writing Delivery Insurance for drivers and, therefore, anyone handling cases with the involvement of delivery drivers may want to explore whether the driver has purchased any additional coverage.

Coverage for these rideshare and food delivery services is relatively new and remains in flux. Those of us handling auto liability claims should keep a close eye on the new insurance products developed to respond to this need and how this developing area of the law impacts automobile accident litigation.