States warn consumers about possible insurance gaps withrideshare companies

A dozen states have warned consumers about potential insurance problems with so-called"ridesharing companies," saying it is unclear who is on the hook when drivers dispatched by firmslike Uber, Sidecar and Lyft get into accidents.

Idaho was the latest state to warn consumers about potential insurance gaps in the new industry,which uses apps to help drivers find fares and customers find rides. Although the companies saythey are not the drivers' employers, and simply take a cut from the fares, that claim may not survivelitigation.

"Potential gaps in insurance coverage for both drivers and passengers is concerning," said IdahoDepartment of Insurance Director Bill Deal.

Passengers of the companies must agree to hold the companies harmless for anything that happenson the trip, according to waivers. But if a driver dispatched by one of the companies causes a seriousaccident and does not have insurance, it is unclear who is liable. An injured rider may not becovered, they say.

The companies claim they are simply tech companies that facilitate rides and fares and are protectedby the Communications Decency Act. The drivers they work with do not appear to be theiremployees, and, like all motorists, are required to have insurance.

But in a serious or even fatal accident involving millions of dollars of damages, the companies couldbe targeted by lawsuits. Already, one such suit is targeting Uber as well as a driver whose policy hasa $750,000 limit. In that case, a private taxi driver, considered by Uber to be a "partner," not anemployee, collided with another car in San Francisco in a wreck that sent a fire hydrant flyingthrough the air. The woman the hydrant struck was badly injured and is suing.

According to Uber officials, the company has created an insurance plan that will pay up to $2 millionper accident for cases involving its "peer-to-peer" plan, in which ordinary folks are matched up withothers who need rides. Lyft and Sidecar have $1 million policies.

Uber officials, in a post on the company's site, said they vet drivers to ensure they have safe recordsand adequate coverage.

"From the time a driver accepts a trip request through our app until the completion of the ride, ourpartners have $1 million of coverage for driver liability," read the statement. "We were also the firstridesharing request service to include $1 million of coverage for uninsured/underinsured motorists,meaning that passengers and drivers are also covered for injuries when another party is at fault andlacks sufficient insurance."

Still, in lawsuits like the one involving the fire hydrant, Uber claims it is not liable for an accidentcaused by a driver it dispatched. Critics say the companies are no more insulated from lawsuits thanowners of taxi cabs or even pizza chains whose drivers cause accidents.

"Uber is trying to distance itself from any liability, instead calling itself a "modern day phone book"of drivers that simply connect people but has no responsibility when accidents occur," the SanFrancisco-based personal injury firm of Bostwick & Peterson states in a message on its web site."However, because Uber does connect people legal analysts assert that it should be treated morelike a taxi company and be held responsible for risks Uber creates."

California, Connecticut, the District of Columbia, Kansas, Maryland, Michigan, Minnesota,Nebraska, New Mexico, Ohio, Rhode Island and Tennessee have all previously warned consumersthat they could potentially face liability for accidents cause by drivers they hire.