Nebraska's state insurance director issued a “consumer alert” Monday, warning Nebraskans that participating in ride services like Lyft may pose “hidden risks” for drivers who do not have proper insurance.
Director Bruce Ramge said that to carry a passenger for a fee, a driver in Nebraska would need a commercial insurance policy.
Lyft launched its app Thursday in Lincoln and Omaha, offering to match drivers with riders free for two weeks.
Ramge's concerns are in addition to those voiced last week by state regulators, who say the service will be illegal if it starts charging a fare for rides without obtaining a state certificate.
A typical private passenger vehicle policy would not cover several types of problems that could occur while the vehicle is being used “as a public or livery conveyance,” Ramge said. The exclusions could apply to: uninsured motorist coverage, medical payments for people using the vehicle, collision damage and the insurance company's duty to defend the driver in a lawsuit.
Lyft says on its website that, among other provisions, its insurance includes excess liability insurance coverage of up to $1 million covering the driver's liability for property damage and bodily injury to passengers and third parties. The driver is required to have his own liability insurance.
Lyft said the policy is intended to provide coverage in case personal insurance does not cover a claim. Its comprehensive damage coverage has a $2,500 deductible and pays a maximum of up to $50,000, as long as the driver has his or her own policy.
Ramge urged drivers to talk with their insurance agents to see what their policies cover. He also said Lyft drivers should ask Lyft if its insurance includes the duty to defend the driver in a lawsuit.
The rules about a commercial policy do not apply to a noncommercial situation, such as a carpooling arrangement where friends share the cost of gasoline, Ramge said.