Ridesharing Company Cannot Have it Both Ways – If its Drivers Are Independent Contractors, then its Insurance Company Cannot be Compelled to Cover Them

undefinedBy Marc A. Scaringi, Esq.

A panel of the Superior Court has ruled the PA Ridesharing Act, which requires an insurance company to cover the “operator” of a vehicle used in ridesharing arrangements, only applies to operators – not independent contractors.

The Riders’ Club operates its business under the Ridesharing Arrangements Act of 1982, which promotes carpooling by exempting certain ridesharing arrangements from laws regulating common carriers and livery (transportation for hire). To ensure operators of ridesharing arrangements have insurance coverage, the Ridesharing Arrangements Act prohibits insurance carriers from denying coverage for those who “operate” vehicles as part of a ridesharing arrangement.

The Riders’ Club provides a way for those who cannot or do not wish to operate their own motor vehicles to connect with drivers to take them where they need to go. The riders pay a fee to the Riders’ Club. The Riders’ Club shares the fee with the driver. Importantly, the Riders’ Club structured itself so that the drivers are not its employees, but independent contractors instead.

A passenger was injured in a vehicle driven by a Riders’ Club driver. The Riders’ Club sued its insurance carrier demanding it insure the loss pursuant to the PA Ridesharing Act which requires an insurance company to cover the “operator” of a vehicle used in ridesharing arrangements. The insurance carrier declined coverage because the driver was not the “operator” – the driver was not an employee or agent of the Riders’ Club. The trial court ruled in favor of the insurance carrier, and the PA Superior Court affirmed, explaining the Riders’ Club cannot have it both ways. It cannot form an independent contractor relationship with the drivers and then try to claim it – and not the driver – was “operating” the vehicle.

If you have questions about independent contractor law do not hesitate to contact Scaring Law at 717-657-7770.

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