"When you bought your policy, you agreed to the coverages and exclusions in the policy, and also to your own (minimal) obligations, one of which is to inform the carrier of a "material change" in the risk."
At the time, we noted that hiring out your vehicle, or offering rides therein, made you a commercial insurance risk, and that personal auto policies explicitly exclude this from coverage. Fast forward a bit to this past Spring, and we restated the problem in the age of Uber and Lyft:
"The Nebraska Departments of Insurance and Motor Vehicles are urging caution before people sign up for Internet services that connect drivers, riders and vehicle owners for car-sharing and ride-sharing."
Again, the problem is whether or not one's policy allows for commercial use, and whether or not one had alerted one's carrier to the change (and obtained appropriate cover).
The challenge takes on a new urgency today:
"A spokeswoman for rideshare service Lyft says one of its drivers was involved in a multi-car crash in Northern California that left a man dead"
It appears that the Lyft driver was at fault (swerving to avoid a broken down vehicle), so the question arises: did he have appropriate insurance? We don't know, but one suspects that we'll soon find out. In the meantime, I've reached out to our favorite P&C guru for his thoughts.
UPDATE: Thanks to Kevin Sullivan, we have a bit more on this developing story:
"While a driver is providing a ride or on the way to pick up a passenger, Lyft offers $1 million in liability insurance, and $1 million in uninsured/underinsured motorist coverage. That coverage, which once was “excess” — kicking in only after a driver’s personal auto policy had been exhausted — became primary coverage in July."
Here's why this is important: it's possible (perhaps likely) that the underlying coverage - that is, the driver's insurance - will not cover this event. That being the case, it couldn't be "exhausted" and therefore Lyft's plan might not come into play at all.
Since Lyft's policy is now considered primary it shouldn't matter whether or not the driver's insurance steps up.
Time will tell.