The Million Dollar Question
We see it all the time. You are driving down I-94, and a car with an Uber or Lyft sticker in the window slams into you. Or perhaps you are a passenger in the back seat of a rideshare when the driver runs a red light.
You might think, "Well, it's Uber. They are a billion-dollar company. They will cover it."
Not necessarily. Uber and Lyft have fought hard to classify their drivers as independent contractors, not employees. This allows them to distance themselves from liability. To get compensation, we have to navigate a complex tiered insurance system that depends entirely on what the driver was doing at the exact second of the crash.
The Three Periods of Liability
In Michigan, rideshare insurance is broken down into three distinct "periods." Knowing which one applies to your accident is the key to your case.
Period 1: App Off (The Danger Zone)
If the driver is in their car but the Uber/Lyft app is turned off, or they are not logged in to accept rides, Uber and Lyft provide zero coverage. The driver is considered just a regular person driving their personal car.
The problem: Most personal auto insurance policies have a "commercial use exclusion." If the insurance company finds out the driver uses the car for work, they might deny the claim entirely. This can leave victims facing an uninsured driver scenario.
Period 2: App On, Waiting for a Ride
The driver is logged in and cruising around, waiting for a ping. They haven't accepted a passenger yet.
In this period, Uber/Lyft provides limited liability coverage. Usually, this is around $50,000 per person for injury and $100,000 per accident. It is better than nothing, but if you have a serious spinal injury or broken bones, $50,000 will be exhausted in the first week of hospital bills.
Period 3: The Ride (The Golden Ticket)
This period begins the moment the driver accepts a ride request and ends when the passenger exits the car. During this window, Uber and Lyft generally provide a $1 million liability policy.
If you are a passenger in the Uber, you are almost always covered by this policy. If you are a pedestrian or another driver hit by the Uber during this time, you also have access to this higher limit.
The Michigan No-Fault Complication
Because we are in Michigan, the No-Fault law adds another layer of confusion. Who pays your medical bills (PIP)?
- If you are a passenger: You usually turn to your own auto insurance first for PIP benefits. If you don't have a car, you might claim through a resident relative. If neither applies, you may have to claim through the Michigan Assigned Claims Plan (MACP), capped at $250,000.
- If you are the Rideshare Driver: You need a special endorsement on your personal policy. Without it, your personal insurer will likely deny your PIP claim because you were using the vehicle for business.
Why You Need a Lawyer Immediately
Rideshare companies are tech companies. They hold all the data. After an accident, we often see disputes about the timeline. The driver claims they had accepted a ride (Period 3), but Uber's logs claim the ride was cancelled ten seconds prior (dropping it to Period 2).
At Shiraz Law Firm, we send preservation letters immediately to lock down the GPS data, ride logs, and app status history. We don't take their word for it; we look at the digital footprint. If you’ve been hit by a rideshare driver, do not sign anything from their insurance company until you’ve had a free consultation with us.
