Uber: Does New Ticket to Ride Carry Personal Risks?

Kevin G. Faley and Andrea M. Alonso
*Originally published in the
New York Law Journal
March 4, 2015

Make a dinner reservation. Deposit a check. Track your daily calories. Learn what song is playing on the radio. All of these things can be done using various applications available on your mobile phone. It seems only natural that ordering a taxi should be just as quick and convenient. But do customers sacrifice safety for convenience when using Uber?

Uber, which was launched in 2009, provides an easy-to-use system to order a taxi or luxury vehicle in your area. The application currently operates in cities within 46 countries around the world. 129 of those cities are in North America.1 Between June 2013 and May 2014, 82,000 people used Uber..2 As of September 2014, Uber was available to 43 percent of the American population, or 137,451,768 individuals, with an average pick-up time of less than 10 minutes.

Uber considers itself a "technology platform" and not a "transportation provider."3 As such, the third-party smartphone application acts as the "middle-man" between the potential passenger and the registered Uber driver. In effect, Uber pays freelance drivers to supply and drive their own cars for Uber customers. The term used to describe Uber's business model is "ride-sharing."

The ride-sharing business model is much different from the traditional taxicab industry. By law, every taxicab is required to hold a licensed medallion, which ensures that the driver has received a background check, the vehicle is legally registered and that the driver holds insurance in case of an accident.4 Uber drivers must adhere to similar standards in New York City.

According to the Uber website, Uber drivers in New York City have two choices in the type of services they can provide. The first is, UberBLACK, which requires drivers to be a professional chauffeur with a commercial license and to have commercial automobile insurance. Similar to standard black car drivers in New York City, UberBLACK drivers must have a valid commercial FHV license from the Taxi & Limousine Commission (TLC). Vehicles that qualify for UberBLACK include black sedans, town cars, crossover SUVs for four passengers and full-size SUVs for at least six passengers. Drivers may also choose UberTAXI, which allows certified taxi drivers, licensed by New York City, to work for Uber instead of their normal taxi dispatchers.

Each Uber driver must have individual TLC-Licensed Insurance. The minimum insurance policy required for an Uber driver is $100,000/$300,000, which is the same minimum amount required by the New York City Taxi & Limousine Commission. Otherwise, drivers can adhere to the Vehicle Insurance Requirements of the New York City TLC Vehicle Insurance Requirement for additional insurance coverage standards.5 Minimum insurance coverage amounts change based on passenger capacity of the vehicle.

Finally, each Uber driver must submit a Social Security card, a state drivers license, DMV registration, title, bill of sale, or leasing agreement, and an insurance card (FH-1) and insurance certificate.6

Several cities, including, Washington D.C., Boston, Philadelphia, and Jersey City, provide a platform for Uber's cheapest ride-sharing option, UberX. Requirements for UberX drivers are simple. Drivers simply have to be 21 years old, with a personal license and personal automobile insurance. Additionally, drivers can provide their services in any mid-size or full-size four-door vehicle, "in excellent condition" as required by Uber.

Uber simultaneously promotes the convenience of the system for the app users and the easy money opportunity for its prospective drivers. Nationally, Uber creates 20,000 jobs every month.7 Uber boasts a median income for its New York City drivers of $90,766. The company asserts that its platform of "entrepreneurship" for its drivers can relieve them of burdens like leasing the vehicles from the taxi company owners, while also allowing them to work the hours they choose work best for them.

Uber's dominance in the luxury ride-sharing industry does not end on the ground though. In the summer of 2014, Uber also offered UberCHOPPER for helicopter rides between New York City and East Hampton.8

All of these numbers seem to paint the picture of a brilliant business model, with a customer base growing exponentially. But, are some Uber customers taking on increased personal risks by using the ride-sharing service as opposed to the heavily regulated yellow cabs of New York City?

Insurance Requirements

In 2014, New York City had 13,237 yellow medallion taxicabs in service, either independently or through fleets. Each of these vehicles must go through a rigorous inspection process three times per year, which includes emissions tests, meter tests, standard safety inspections and general vehicle maintenance. For-hire black cars in New York City are inspected only once every two years.9 Each of the medallion taxicab owners must maintain liability coverage through an insurance policy or a bond. New York State Insurance Law §5102(a)(1)-(3) requires $100,000 minimum liability and not less than $300,000 maximum liability for bodily injury or death as described in §370(1) of the Vehicle and Traffic Law.10

New York Uber drivers must abide by the same insurance guidelines for minimum requirements in coverage as typical yellow cab drivers. But, unlike yellow cabs, whose insurance is purchased by the medallion owners for their individual vehicle or fleet of vehicles, Uber drivers purchase their own insurance because they own the car used for their work with Uber. For livery vehicles and black cars with seating capacity of one to eight passengers operating in New York City, the Taxi & Limousine Commission only requires the same $100,000/$300,000 policy.

New York City is more conservative in its acceptance of Uber, given the fact that only commercially licensed UberBLACK and UberTAXI drivers provide the ride-sharing service. Moreover, the fact that Uber drivers in New York City must adhere to the same insurance standards as other for-hire vehicles and yellow cabs creates a rather uniform adherence to existing industry standards.

Problems have and will continue to arise in cities and states where Uber drivers are not required to hold commercial insurance, as they are in New York. For example, as of the beginning of 2014, drivers who used their own cars for Uber services were in uncertain insurance positions. They held personal insurance policies for their vehicle, but were not covered for the actual commercial activity they were conducting.11

This issue was addressed following an unfortunate incident in San Francisco on New Year's Eve 2014, when an UberX driver looking for passengers hit a family within a crosswalk and killed a 6-year-old girl. The question became, "If drivers are merely out looking for riders with their Uber driver app on, what, if any, responsibility does the company have for them and any damage they do?"12

Uber has tried to rectify this gap in insurance coverage since the New Year's Eve incident. As a result, Uber has implemented a $1 million uninsured-motorist policy that provides passengers with added protection. Every time a driver accepts a trip, is en route to pick up passengers or is transporting passengers, there is potentially $1 million coverage. This new commercial policy protects all Uber drivers from being subject to a driver who may have a lower threshold on his personal policy insurance or is considered "underinsured." This supplemental coverage is meant to apply when another party is at fault and that party lacks sufficient insurance coverage or when there has been a hit-and-run incident.13

Uber drivers are also backed by a contingent policy which has a $50,000/$100,000/$25,000 breakdown. This provides for $50,000 for bodily injury per individual per accident between trips, $100,000 per accident, and $25,000 for property damage. But, these figures only come into play in the rare instances when the personal insurance provider of the driver denies coverage for the incident.14


Although UberX, the lowest cost option provided by Uber, is not permitted in New York City, the service is in place in New Jersey, Connecticut, Philadelphia, and Washington D.C., among many others. These UberX drivers do not hold a commercial license, which is required for Uber services in New York.

UberX drivers in other cities are not required to adhere to the strict commercial license and insurance standards of UberBLACK and UberTAXI. Uber customers in New York City can utilize the UberX option on their app strictly for the possibility of paying about 30 percent less for their trip. But, UberBLACK and UberTAXI drivers in their area may deny the cheaper rate and simply not pick up the customer.

As of July 2014, Uber has changed its protocol with respect to UberX ride-sharing participants. First, each ride-sharing driver must undergo background checks, and second, all ride-sharing partners are afforded commercial insurance coverage in case of an accident. Uber holds a commercial insurance policy with $1 million of liability coverage per incident. Uber makes clear that this policy "is expressly primary to any personal auto coverage" with respect to third parties, but it will not take precedence over any commercial auto insurance for the vehicle owned by the Uber driver. In the event that another motorist causes an accident with an UberX vehicle and does not carry adequate insurance, the same $1 million policy will cover occupants of the ride-share vehicle.

In sum, UberX drivers who do not have their Uber app on are only covered by their personal auto insurance. Once they turn the app on, but do not yet have an Uber customer, both their personal auto insurance and Uber's contingent liability insurance can apply. (This affords the driver $50,000 for injury, $100,000 for back-up injury coverage, and $25,000 for property damage). This is important for UberX customers of the tristate area who take an UberX into New York City, perhaps from Connecticut or New Jersey, and are not protected by the commercial insurance and licensing requirements for drivers here. Finally, if an UberX driver has a passenger and is en route to their destination, Uber's commercial insurance coverage kicks in. This provides $1 million third-party liability, $1 million underinsured/uninsured coverage, and contingent collision coverage.15

Given the limited options via UberBLACK and UberTAXI provided to prospective Uber drivers in New York City, Uber customers are protected to the same extent as they would be in a yellow cab or for-hire black car.

For example, although UberX is not listed as a service for prospective drivers on the Uber New York City website, it is an approved service on the Uber New Jersey and Uber Hamptons sites. As such, passengers who take UberX vehicles into New York City are not afforded the same insurance protections and licensing requirements that are standard among Uber New York City drivers. Additionally, Uber limits the hours of trips, but not the miles. Therefore, Uber drivers from other cities in New Jersey or Connecticut, who do not hold commercial licenses or insurance coverage similar to that of Uber New York City drivers may very well take trips into the city. Uber acknowledges the differences in prerequisites for Uber New York drivers on its own website. It asks, "No TLC License? Drive New Jersey or Connecticut instead! Use your regular license and car."16

There have already been issues between drivers and Uber's corporate entity. Recently, according to the Uber Drivers Network website, Uber attempted to force its drivers to accept all UberX fares made available to them. Although UberX is not an option for prospective drivers in the city, the fare choice is on the app provided to customers. Uber drivers challenged the requirement that they "must" pick up the UberX fare instead of another UberBLACK or UberTAXI fare. As a result, UberX fares can be denied by Uber drivers in New York City.17

Other Issues

Another recent issue with customers of Uber involves the "surge pricing" tactic used by the company. Surge pricing increases Uber rates to get more cars on the road and also, as Uber claims, to "ensure reliability during the busiest times." The company justifies this business practice by claiming that more cars in service at a given time will decrease the wait times for customers.18 But Uber does not implement surge pricing only when there are fewer cars in service. It is reported that it also increases the prices during inclement weather or rush hour.19 In July 2014, following criticism of Uber for profiting during crisis, the company agreed to cap fares in New York during emergencies and natural disasters.20

Perhaps one of the most significant issues in the news more recently is customer privacy with the Uber "God View" capability. The "God View" tool allows corporate employees to track any driver or user that has requested a car.21 This technological ability obviously evinces significant privacy concerns of both employees and users of the application. Uber claims that "God View" capabilities should only be used for "legitimate business purposes," such as supporting riders and drivers to solve problems, facilitating payment transactions, monitoring driver and rider accounts for fraudulent activity, and reviewing specific accounts to fix bugs.22

Regardless of the recent publicity of Uber's CEO, tremendous capital investments, or privacy concerns for drivers and customers, the convenience of the technology in a city like New York is unparalleled. Uber's understanding of driver and customer protection has led to an overhaul in supplemental insurance coverage and has created a safer customer experience than the traditional yellow cabs of New York.


1. https://www.uber.com/en-US/cities.

2. Alison Griswold, "How Uber and Lyft Stack Up in the United States" Slate http://www.slate.com/blogs/moneybox/2014/09/11/uber_vs_lyft_futureadvisor_study_compares_revenue_users_growth_at_the_companies.html.

3. Dana Rubinstein, "Uber, Lyft, and the end of taxi history" Capital http://www.capitalnewyork.com/article/city-hall/2014/10/8555191/uber-lyft-and-end-taxi-history.

4. Richard Levin, "Uber has uninsured-motorist coverage, do you? Umbrella insurance policies protect passengers and drivers," 24 Westlaw Journal Insurance Coverage 1, (2014).

5. http://www.driveubernyc.com/tlc-overview/.

6. http://www.driveubernyc.com/tlc-process.

7. http://blog.uber.com/uberimpact.

8. http://blog.uber.com/nyc/uberchopper-hamptons-shore-2014. The service also included UberSUV rides to and from the helipads in New York City and East Hampton.

9. Taxicab Factbook 2014, New York City Taxi & Limousine Commission, http://www.nyc.gov/html/tlc/downloads/pdf/2014_taxicab_fact_book.pdf.

10. NYC Taxi & Limousine Commission Rules §58-13(d)(1).

11. David Streitfeld, "Rough Patch for Uber Service's Challenge to Taxis," The New York Times (Jan. 26, 2014) http://www.nytimes.com/2014/01/27/technology/rough-patch-for-uber-services-challenge-to-taxis.html.

12. Id.

13. Ron Lieber, "The Question of Coverage for Ride Service Drivers," The New York Times (Sept, 5, 2014) http://www.nytimes.com/2014/09/06/your-money/auto-insurance/offloading-the-risk-in-renting-a-car-ride.html.

14. Id.

15. http://blog.uber.com/ridesharinginsurance.

16. http://www.driveubernyc.com/tlc-overview/.

17. http://www.udriversnetwork.com/our-cause/.

18. https://support.uber.com/hc/en-us/articles/201836656-What-is-surge-pricing-and-how-does-it-work-

19. Kevin Roose, "Here's How Uber Should Fix Its Surge Pricing Problem," New York Magazine, (Dec. 16, 2013). http://nymag.com/daily/intelligencer/2013/12/ubers-surge-pricing-problem.html

20. Susan Decker and Serena Saitto, "Uber Seeks to Patent Pricing Surges that Critics Call Gouging," Bloomberg (Dec. 18, 2014) http://www.bloomberg.com/news/2014-12-18/uber-seeks-to-patent-pricing-surges-that-critics-call-gouging.html.

21. http://www.nbcnews.com/tech/tech-news/uber-battles-privacy-concerns-over-god-view-tool-n251691

22. http://blog.uber.com/privacypolicy