Buyer Beware: The Hidden Cost of “Free” Rideshares

Entrepreneurs in the transportation business have come up with rideshare models that aim to skirt government licensing and regulation.  Companies such as Lyft, Sidecar and Uberx call themselves rideshares (think carpooling), but in reality vary little from taxi services and cars-for-hire, which are regulated by local governments.  Think twice before you get into a “Rideshare” vehicle.  Even if the cost for such transportation is typically less than a car-for-hire or taxicab, you may be risking something far more valuable than a few dollars:  your physical safety.

Seattle City Council Turns a Blind Eye Toward Rideshare Businesses, for Now

A recent Seattle Times article revealed how City Council members are well aware of the unlicensed for-profit Rideshare businesses operating on our city streets, but purposely are delaying regulation until further research is completed.  This means that the businesses pay none of the regular licensing fees and taxes that taxis and cars-for-hire must pay, and that these businesses are not subject to the same safety and insurance requirements as licensed businesses.  If you are injured by the negligence of a rideshare driver, the driver’s personal insurance policy may not cover you if the insurance company believes the vehicle was being used for business purposes.  It’s a strong argument for the insurance company and makes the City Council’s delay in regulating these businesses all the more puzzling.

See: Seattle Times Local News

Two of the new unlicensed businesses on Seattle City streets, Lyft and Sidecar, suggest they differ from cars for hire because payment is not required for the service.  Instead, donations are highly encouraged, by means of a bankcard.  Sidecar provides the following service tips:

  • Be generous but fair with your donations.
  • Donate as soon as you can after – or during – your ride. Every driver appreciates that. (And never offer cash. Sidecar is cashless for safety reasons.)

See: Sidecar Rules of the Road

That payment is expected is made clear on Sidecar’s website where new drivers are solicited.  The bold motto can’t be missed:  “You drive everyday.  Why not get paid for it?”

See: Sidecar

The businesses are evidently profitable enough to keep expanding despite legal disputes with cities across the nation.

Sidecar has been locked in a lawsuit against the city of Austin, Texas, where it has continued to operate after the city council passed a law earlier this year banning the service. The company has also defied the Philadelphia Parking Authority, which has tried unsuccessfully to shut it down.

See: Huffington Post

Is the City of Seattle Opening Itself to Liability for Failing to Regulate Lyft, Sidecar and Uberx?

If our government fails to act, Seattle may eventually face liability for knowingly allowing these potentially unsafe, unregulated transportation services to continue.  Taxicab companies are subject to stringent rules and regulations regarding safety of its drivers and fleet of cars, as well as requirements for commercial insurance policies.   The rideshare companies are subject to no such regulation, save the rules they devise themselves.  While these companies encourage their drivers to obtain commercial insurance policies, it is not a requirement.

Both Sidecar and Lyft tout their one-million dollar excess liability insurance policies as assurance of safety and coverage.  While appealing on the surface, there are many limitations on the application of this coverage.   For example, liability insurance doesn’t cover injuries caused by the negligence of the rideshare driver – i.e. a passenger would not be covered if the driver causes a collision.  Also, this is not uninsured motorist coverage or personal injury protection coverage.   These and other limitations are detailed in the fine print of the companies’ terms of use.  Once again, buyer beware.

Our City may not just be liable for injury claims by failing to take action against illegal businesses.  Local taxicab and legitimate hired-car businesses may have claims for discrimination against the City for failing to enforce business regulatory rules against these ridesharing businesses.  Taxi companies pay fees and taxes for the privilege of operating their businesses on our city streets.  As with all business license fees and taxes, these funds are crucial in maintaining our City’s infrastructure, including safe streets.  The rideshare businesses are unjustly boosting their profit margins by escaping these taxes and fees.

You Get What You Pay For

The best advice:  Don’t gamble with your safety.  Use caution when traveling the city streets.  If you have any questions about driver, business or government liability, or have sustained injuries due to the negligence of others, please do not hesitate to contact Dixon & Cannon, Ltd at (206) 957-2247.

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