New Liability Standards for Uber & Lyft Accidents: How They Could Affect Rideshare Recovery
January 30, 2026
Uber proclaimed the change as a “major step forward toward making rideshare more affordable.” But new standards that just took effect in California could impact those who rely on rideshare in ways that are not entirely positive. To understand why, it is helpful to examine what the standards changed under the new laws and the potential effects on rideshare passengers.
With the popularity of rideshare transportation at an all-time high, the likelihood of being involved in a rideshare accident continues to increase. It is important to understand liability in these situations.
Who is Liable When a Rideshare Driver is Involved in an Accident?
When a car accident involves two private vehicles that are not being operated for commercial purposes, the driver or owner of the vehicle considered to be primarily at fault for causing the collision is considered legally liable for the majority of injuries and property damage that result. The situation is often different when a commercial vehicle is involved in an accident. Many times, the company that employs the at-fault driver can also be held liable when a crash occurs while the vehicle is being used for commercial purposes.
Uber and Lyft have classified their drivers as independent contractors rather than employees and generally use this classification to insulate themselves from liability for accidents involving their drivers. The companies claim they are merely technology platforms that connect drivers with riders and have no control over how drivers operate.
However, the California Public Utilities Commission has determined that rideshare companies are transportation network companies under the California Public Utilities Code. These transportation network companies are required to obtain a permit from the Commission to operate in the state. Section 5354 of the Public Utilities Code specifies that the negligent action of an employee, agent, or person authorized to provide service by a permit-holding transportation organization should be considered the action of the organization itself. In other words, it can clearly be argued that the Code establishes vicarious liability on the part of rideshare companies for the actions of their drivers. The classification as independent contractors should be construed solely as a matter of tax status for drivers.
Therefore, it should be possible to hold rideshare companies directly responsible for harm caused by their drivers in some cases. This could become a resource for recovery if injuries should exceed insurance coverage in force at the time of the accident.
Uber and Lyft Provide Insurance for Their Drivers But It Only Applies in Certain Situations
California law sets minimum requirements for liability insurance for rideshare vehicles, but that insurance can be provided by the rideshare company, the driver who operates for the company, or a combination of both. To attract drivers, Uber and Lyft advertise that they offer up to $1 million in liability insurance coverage. This can provide valuable resources for someone injured in a rideshare accident. However, this insurance is not available every time an Uber or Lyft driver is involved in a collision.
First of all, this insurance only applies when a rideshare driver is found to be at fault. Insurance companies and corporate attorneys will be arguing strenuously to avoid having their driver found responsible for the accident, so it is important for anyone injured in the accident to work with an attorney who is prepared to counter their arguments effectively.
Second, the insurance coverage is limited to situations where the Uber or Lyft driver is actively working using the rideshare app. Specifically, if the driver has the app turned on and the vehicle is traveling to pick up a scheduled passenger or a passenger is already in the vehicle, then the full coverage applies. However, if a rideshare driver is involved in a collision while the app is turned on but the driver is still waiting to accept a ride request, then the insurance coverage is much more limited.
California law does not require specific rideshare insurance in this situation, but general insurance requirements require vehicles to have at least $30,000 in liability coverage for injuries to one person or $60,000 in coverage for injuries to more than one person. The insurance provided by Uber and Lyft exceeds these minimums, providing $50,000 for an individual and $100,000 for injuries to more than one individual.
If a rideshare driver is on the road with the app turned off, the rideshare companies do not provide any insurance coverage. The only applicable insurance would be the vehicle owner’s or driver’s.
Uninsured Motorist Insurance
The new laws that just took effect apply to a different type of insurance coverage. California law requires rideshare companies to provide uninsured and underinsured motorist (UM/UIM) coverage that applies when a rideshare passenger is in a rideshare vehicle. This insurance provides coverage in situations where a rideshare vehicle is in an accident that is caused by someone other than the rideshare driver. If the person responsible for causing the accident does not have liability insurance or does not have enough liability insurance to cover the losses in the collision, then UM/UIM coverage provides funds to make up the shortfall.
California formerly required rideshare companies to provide $1 million in UM/UIM coverage. Under the new law, the requirement has been substantially reduced. Section 5433 of the Public Utilities Code now requires rideshare companies to provide UI/UIM coverage of $60,000 per person (up to $300,000). This significantly reduces the resources available when a rideshare vehicle is involved in a serious accident caused by a driver with inadequate insurance. However, an experienced accident attorney may be able to seek recovery from additional sources in situations where a third party may have contributed to liability or where the rideshare company may be held liable directly.
Find Out How We Work Effectively For Full Recovery After Rideshare Accidents
We can’t explain the potential recovery in a rideshare accident case without knowing the details of the situation. If you’ve been hurt in a rideshare collision, you can call us at 714-400-2000 or contact us online to schedule a free consultation where we can assess the specific factors that affect damages in your case and explain your options for recovery. It is important to understand your legal rights before you talk to the rideshare company or the insurance companies involved, or you could end up unintentionally forfeiting those rights and losing the recovery you deserve.