Understanding Ride-Sharing Insurance in Michigan

Michigan Insurance Coverage for Ride-Sharing Services

Michigan is a no-fault state which means there are certain uncertainties when it comes to Michigan auto insurance coverage for ride-sharing drivers and passengers. Most ride-sharing companies’ coverage is secondary to the driver’s policy. Personal auto insurance companies in Michigan do not provide coverage for vehicles that are being used for ride-sharing services.

Michigan Updates Law for Ride-Sharing Drivers

March 21, 2017, the Michigan legislature clarified requirements for Ride-Sharing Drivers.  The state will now regulate Ride-Sharing services in the same way as limousine and taxicab carriers. The new law requires all drivers to carry:

• $1 million in liability coverage for crashes during a pre-arranged ride – while the driver is transporting a passenger.
• $50,000 in liability coverage for collisions between pre-arranged trips – while the driver waits for the next customer.

Under the reform act passed effective July 1, 2020, Uber and Lyft operators must obtain $250,000, $500,000, or unlimited coverage. Drivers will need a rider for attendant care over the applicable limit.

Michigan law requires these safety requirements for ride-sharing drivers.

• All drivers must undergo extensive background checks.
• Vehicles must have regular inspections.
• Ride-sharing companies cannot hire drivers with multiple moving violations, major driving violations, a felony conviction, or who are on the National Sex Offender Registry.
• Before riding, passengers must see a photo of their driver and the vehicle’s license plate number.
• Cars must display “signage” on their vehicles identifying the ride-sharing company with which they are driving.
• Drivers must be at least 19 years old and have a valid driver’s license issued from Michigan or another state.
• You can only have up to four moving violations or one major violation within the last three years.
• Drivers on the National Sex Offender Public Website or have a felony conviction within the last five years.

The recent law clarifies that injured passengers must rely on their insurance company for medical benefits. The only way an injured passenger can get PIP benefits from a driver’s insurance company is if there is no other source of insurance, which means that the passenger does not have a no-fault policy.  A passenger not required to maintain auto insurance can claim benefits under the driver’s policy but is subject to whatever PIP choice they select. A final option would be to file a claim for PIP benefits through the Michigan Assigned Claims Plan (MACP).

Ride-sharing services provide auto insurance coverage in three sections:

1. Not Logged In: Personal Driving: No insurance provided by any of the services. Their insurance policy only covers drivers.
2. Logged In & Waiting For Ride Request:

Lyft provides (Contingent liability coverage with 50/100/25 limits provides secondary coverage that pays only for losses not covered by the driver’s policy).

Uber provides (Contingent liability coverage with 50/100/25 limits provides secondary coverage that pays only for losses not covered by the driver’s policy).

 3. En Route To Pick Up Passengers or Driving Passengers:

• Lyft provides third-party auto liability coverage with $1 million limits and uninsured/underinsured bodily injury insurance with $1 million limits.
• Lyft then maintains contingent comprehensive & collision coverage up to the car’s actual cash value ($2,500 deductible) for drivers with personal comprehensive and collision coverage. 
• Lyft provides First-party coverage, which may include coverage for uninsured motorists, underinsured motorists, PIP, MedPay, and/or occupational accidents.
• Uber provides liability coverage with 50/100/25 limits, which is secondary coverage that pays only for losses not covered by the driver’s policy.
• Uber also provides insurance that covers the cost of repairing your car, up to the actual cash value, with a $2,500 deductible, contingent on your personal insurance, including comprehensive and collision coverage. This extra insurance that Uber maintains protects your car, no matter who’s at fault, if you maintain comprehensive collision coverage on your vehicle.