No matter what you may think of insurance companies, they are the best b.s. detectors in contemporary culture - out of necessity. Millions, if not billions, of their dollars depend upon the precise definition of words.
When I applied for positions as a "community driver" at Lyft and Sidecar, representatives of both companies told me that I didn't need commercial insurance because they were "not commercial enterprises." I called ten top rated insurance companies and asked them if they agreed with this statement. Not one of them did.
Progressive and All State would consider insuring my car as a business or commercial risk if I drove for Lyft or Sidecar. Geico, State Farm would not insure the car at all if I did so.
While it's true that auto insurance companies are required to cover a "vehicle used in an ordinary carpool on a ridesharing or cost sharing basis," none of the insurers I spoke with consider what Lyft and Sidecar do as ridesharing.
My Geico representative described ridesharing as "people sharing a ride back and forth to work or to an event or to the same location." The cost of the ride should be shared equally by passengers and driver. If the driver made a profit on the ride, it did not make any difference to her if you called the payment a "fee" or a "voluntary donation." A USAA rep simply said that he would not cover a car if it "transported individuals."
In comments to the California Public Utilities Commission, the Personal Insurance Federation of CA, which represents six of the largest insurance companies in the U.S. and who collectively insure the majority of personal lines auto insurance in California, explained the position of its members on the subject:
"It appears that the industry standard for personal auto insurance ... is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a charge. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance coverage would exist."
" ... The issue before the CPUC is not ridesharing, but instead using a private passenger vehicle in a livery service. This is clearly NOT covered under a standard policy; if an accident occurs, coverage would NOT exist." (My capitalization.)
In short, the information that Lyft and Sidecar are giving their drivers and customers is false. If the vehicles using their apps do not have business or commercial insurance they are not insured and neither the drivers or the customers are covered if they are hurt in an accident.
What Million Dollar Guarantee?
Journalists have consistently missed the point about Lyft's and Sidecar's lack of insurance. But on September 4, 2012, reporter Zusha Elinson from the online paper, The Bay Citizen, wrote an article contrasting the low limits ($15,000-$30,000) of personal liability insurance to the $1,000,000 liability limits required of San Francisco taxicabs.
On September 6, 2012, Lyft and Sidecar announced that they too would provide their drivers with $1,000,000 liability insurance.
Lyft said that they would carry "excess liability per occurrence with an A++ insurer."
Sidecar offered a guarantee instead of insurance.
"The Guarantee provides for up to $1,000,000 in damages for covered losses in the event of an incident. These payments are subject to certain conditions, limitations and exclusion, the details of which can be found in our Program Terms available from Sidecar upon request."
"The Guarantee is not insurance and should not be considered as a replacement or stand-in for primary automobile insurance. The Guarantee does not cover certain excluded losses."
Both these policies (or whatever they are) would be what are often called umbrella policies because they would go into effect above the limits of the vehicle's existing insurance. If, for instance, an injured party was awarded $100,000, the driver's policy might cover the first $30,000 and the umbrella would cover the remaining $70,000.
Since few, if any, of Lyft and Sidecar's vehicles would actually be covered with "existing insurance" per state law, this raises a few interesting questions:
If a Lyft or Sidecar driver does not have the required commercial insurance and thus has no insurance, would the umbrella, the excess liability or the Guarantee, take effect at all? If they did, the driver would still be responsible for the first $30,000 or so in a bodily injury accident. If the umbrella did not take effect then the driver would be responsible for everything.
Given that people who use their own cars to make extra money aren't likely to have $30,000 handy, both the "excess liability" policy and the "Guarantee" are meaningless PR gimmicks.
Tracking down the Million Dollar Promises
During my three minute interview at Lyft, I asked their rep what A++ insurer provided the policy and if I could get a look at it. She told me with annoyance that no one had ever asked her that question before. I then asked her if she'd read the policy. My question clearly struck her as impertinent. "No," she snapped. "You can get it from the CEO."
This turned out to be a problem because Lyft's Facebook page showed no link to CEO John Zimmer. I did find a Facebook post from a speech he gave on transportation and asked my questions as a comment. When I checked back later, both Zimmer's post and my questions had disappeared.
I then wrote to Lyft and once again asked the name of the insurer and if there were any conditions or exclusions.
The next day I received this response from Lyft Admin:
"We appreciate the time you've taken to explore the Lyft community. We approve drivers through an ongoing assessment of several criteria including customer service orientation. At this time, we are adding you to our wait list and may contact you in the future as the community expands."
I'm still waiting for the name of that A++ insurer.
I found Sidecar's Guarantee on their webpage, clicked a link and asked to see the details of their conditions, limitations and exclusions.
I didn't get answer so I asked the same questions during orientation at Sidecar U three days later. The instructor referred me to Sidecar City Manager Chris Dally who gave me his card and assured me that he could answer my questions.
I called him the next day and asked about the exclusions.
"I'm not too familiar with what exclusion you're talking about," Mr. Dally said. "... It is a little bit of legal speak in there ... It's pretty standard for terms and agreements and things like that ... The things I point you to are the terms of usage ... We'll let you know ... So I want to make sure you're feeling comfortable and again no driver should be doing this if they feel uncomfortable ..."
I asked if the Guarantee was an insurance policy.
"It's a guarantee," he said.
"Who guarantees it?
"It's a guarantee."
I followed up with an e-mail asking about the exclusions the next day.
Dally wrote back giving me the original support link where I'd started.
I tried it again. This time a guy name Max wrote back, also referring me to the original link and added:
"I have forwarded this to our legal team to get more information for you regarding the Program Terms. You should hear back from us soon."
I'm still waiting.
The CPUC claims to have looked at Lyft's million dollar insurance policy and signed off on it - whatever that means. But CPUC apparently is not sharing this policy with anyone else at this time. In any case, as I've pointed out above, the policy is meaningless unless Lyft's drivers are already covered by commercial insurance.
The link to Sidecar's million dollar Guarantee can no longer be found on either the Sidecar webpage or their blog. This is appropriate because the "Guarantee" clearly never truly existed in the first place.