FORTUNE -- When is an Uber driver an Uber driver, and what happens when there's an accident?
Million-dollar questions like these -- and more -- are being asked in the aftermath of Sofia Liu's death. On New Year's Eve, the 6-year-old was struck and killed by Syed Muzzafar in his gray Honda Pilot as she crossed an intersection in San Francisco's Tenderloin neighborhood. Weeks later, Liu's family filed a wrongful death suit against Muzzafar and Uber, alleging Uber was also responsible because Muzzafar was looking for passengers and had the Uber app open on his smartphone.
"Under the law, is the clock ever off? When are these guys deemed to be on?" wonders Ara Jabagchourian, a partner with the Los Angeles-based law firm, Cotchett, Pitre & McCarthy, LLP. (Jabagchourian is not involved with the case.)
Uber argues its drivers can work whenever they please, a draw for some former cab drivers used to working regular shifts. But drivers -- or at least Uber X drivers -- should note the company's insurance policy works similarly. Black car drivers, for instance, are required to have commercial insurance that covers them at all times, whether that insurance is covered by the driver or their employers. Likewise, Uber X drivers are contractors, not company employees, and what their coverage looks like can wildly vary: Some may be covered via commercial insurance because of another employer or because the driver opted for it, but by no means is it mandatory for an Uber X driver to have it.
Instead, Uber has a million-dollar insurance policy covering potential damages like those the Lui family is seeking, but that policy kicks in from the moment a passenger hails an Uber X driver with the Uber app until the moment the passenger is dropped off. And if an accident does happen, the policy either kicks in to make up the difference between what a driver's personal insurance covers and damages sought, up to and including $1 million; or if the driver is for any reason uninsured or underinsured.
Uber's competitor, Lyft, offered somewhat similar insurance coverage until this Wednesday when Lyft expanded its scope. The startup introduced collision coverage of up to $50,000, provided Lyft drivers already have personal collision coverage of their own. According to Lyft spokesperson Erin Simpson, several Lyft drivers have previously run into problems with their personal insurance providers regarding accidents once the provider realized they drove for a ride-sharing service. So Lyft's collision coverage is intended as a guarantee for drivers when they're on the clock -- not a standalone plan. (In addition, Lyft's new policies now offer coverage up to $1 million for uninsured or underinsured motorists.) Lyft also announced participation in the Peer-to-Peer Rideshare Insurance Coalition, a group of transportation companies -- one that includes competitor Sidecar -- as well as regulators, insurance providers, and other stakeholders trying to address insurance issues within the space.
In Muzzafar's case, Uber argues it isn't liable because he was merely looking for passengers but hadn't found one yet. If a user had already hailed Muzzafar and Muzzafar was en route to pick them up, or an Uber passenger was already in the car, Uber's million-dollar policy would apply, but only then, if the driver's personal insurance isn't enough to cover all the damages.
The reality is less clear-cut. "The argument could be made they [drivers] are using the app while they're driving, and obviously use of cell phone is illegal in California," points out Jordanna Thigpen, a Los Angeles attorney with Westerman Law Corp. and former executive director of the San Francisco Taxi Commission. Currently, liability as it pertains to a company like Uber largely varies by city or state. And while there remains much to be sorted out, Thigpen argues for balanced legislation -- neither lacking, nor stifling innovation -- for the ride-sharing space. Says Thigpen: "There's a reason transportation has been regulated for over 100 years. If you leave mass people to their own devices, well, it's not a good idea."
Early investments in the car service startup are worth an estimated 400-600x.
FORTUNE -- Say what you will about Uber's cocky founder, its surge pricing, or its shady drivers. From a pure investment standpoint, the car service startup has been golden.
Some back-of-the-envelope math shows why: Take Uber's $1.5 million angel round, led by First Round Capital and Lowercase Capital. It had a valuation of around $4 million pre-money. The company's later MOREErin Griffith - Feb 4, 2014 6:47 PM ET
Uber, Lyft, and other ride-sharing upstarts are transforming a slow-to-change industry from the outside in.JP Mangalindan, Writer - Jan 15, 2014 11:45 AM ET
Like a buzzy nightclub with velvet ropes, the luxe car service was never intended to serve everyone. The real surprise was that people thought otherwise.
FORTUNE -- On Dec. 14, as heavy flurries and hail pounded pedestrians on Manhattan's streets, cookbook author Jessica Seinfeld -- wife of comedian Jerry -- shared an Instagram photo of a taxi receipt for $415, to which she appended the following tags: "#OMG #neverforget #neveragain #real."
This was no ordinary MOREJessi Hempel, writer - Dec 30, 2013 1:22 PM ET
The on-demand, mobile app-based transportation service has enjoyed tremendous growth. Its new financing platform promises to press the pedal even closer to the metal.
FORTUNE -- Uber, the company behind the eponymous mobile application that promises to hail a personal driver with a tap of one's finger, announced last week a new program intended to help would-be Uber drivers afford vehicles. It might just kick the startup company's growth into high gear.
Uber says MOREChanelle Bessette - Dec 5, 2013 9:02 AM ET
From Patch to EveryBlock, many community-focused sites have struggled or collapsed entirely. What are they getting wrong?
FORTUNE -- Ever heard of EveryBlock or Village Soup? What about Backfence? Each community-focused venture launched, then folded. Many more so-called hyperlocal sites have also tried and failed. Even AOL's Patch news sites have had trouble sticking. Their struggles beg the question: Why is hyperlocal so hard?
It shouldn't be in theory, at least where news MOREJP Mangalindan, Writer - Aug 21, 2013 12:17 PM ET
From TaskRabbit to Gobble, scores of startups now cater to those either unable -- or unwilling -- to do something for themselves.
FORTUNE -- After a long day or week, the last thing I want to do is house chores. So plates and laundry stack up. The floors don't get Swiffered. When that happens, I'll spend more time clambering around, pajama-clad, and deliberating -- time I could have used to actually MOREJP Mangalindan, Writer - Aug 5, 2013 10:34 AM ET
The rapidly expanding car service is trying to expand its mission.
FORTUNE -- Ask Travis Kalanick about the future of Uber, and he'll tell you that it has become a brand that transcends its original mission. "Today, we're in the business of delivering cars," Kalanick said onstage at this year's Brainstorm Tech conference. In the year-and-a-half since Fortune profiled Kalanick, Uber has rapidly expanded into new markets, despite regulatory hiccups in cities MOREJP Mangalindan, Writer - Jul 23, 2013 6:37 PM ET
That may be why it's getting more attention than ever.
FORTUNE -- Uber is raising money again. After several weeks of speculation that the digital taxi-hailing service would raise a round large enough to value the company at well over $1 billion, CEO Travis Kalanick confirmed to the Wall Street Journal July 12 that he was talking to investors. The exact amount is TBD, but I plan to ask him about MOREJessi Hempel, writer - Jul 15, 2013 2:02 PM ET
As the sharing economy expands into transportation, Millennials are growing up with carsharing, a very different spin on car ownership.
By Kurt Wagner, reporter
FORTUNE -- When RelayRides CEO Andre Haddad isn't using his 2006 Porsche 911, he encourages strangers to drive it.
This willingness to share -- even something as valuable as a sports car -- is the premise behind carsharing, a growing industry that connects car owners with renters seeking MOREMar 12, 2013 1:07 PM ET
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