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We’ve previously discussed independent contractors when it comes to who is covered under workers’ compensation law and who isn’t, but recent events have raised more questions pertaining to independent contractors and commercial insurance.

As technology transforms virtually all industries, there is a rapidly growing gray area when it comes to legal liabilities, because we’re advancing faster than our laws are changing. An example of such a case is the up-and-coming business known as “ridesharing.” Think of it as car pooling, but commercialized. Instead of calling a cab or a private car service, you can search your local area for a driver through a number of ridesharing networks, and that person will come, pick you up, and take you where you want to go. Oftentimes these people are driving their personal cars, or work for independent transportation companies.

Uber, an international ridesharing company, states clearly on their website that they are “not a transportation carrier” and that they do “not provide transportation services,” and they act merely as a liaison between their customers and the transportation providers. Their language clearly illustrates that the drivers are independent contractors, and are not employed by Uber.

Transportation companies that own fleets of vehicles are required to have commercial auto insurance policies, to insure the drivers, the vehicles, and the passengers. But in the case of a company that explicitly labels itself as not being a transportation provider, and doesn’t actually own a single vehicle, what reason is there for a commercial auto policy? There isn’t one! And therein lies the issue.

Uber has built itself by partnering with people who are operating their own local transportation companies, and as such it’s expected that those companies have their own commercial auto insurance. As the company expands, however, it has opened up the opportunity for individuals to use their own vehicles to shuttle people around. In such a scenario, Uber provides a commercial policy to cover the rides. This leaves the question open of who, exactly, is responsible in the case of a collision?

On January 1st, a six-year-old girl was killed in a traffic accident in San Francisco when a man driving an SUV hit her and her family as they were crossing at a crosswalk. The man was later identified as Syed Muzzafar, an Uber-contracted driver. In the wake of the accident, it was determined that Muzzafar was not on the Uber-clock, so to speak, as he was not doing a job through the Uber system at the time of the accident. As such, Uber’s insurance is not liable to cover the driver, because their coverage only protects drivers during active rides, not between rides or during their personal driving.

Uber seems to have taken the necessary actions in the aftermath of the accident, investigating the events and issuing a statement on their blog, wherein they express their condolences to the victim. They also confirm that they have deactivated Muzzafar’s Uber account, and that he was not providing an Uber-related service at the time of the accident.

As independent contractors, Uber drivers are expected to have their own insurance protection to cover accidents such as this. Should Uber be responsible for accidents that their contracted drivers are involved in when they’re not on Uber’s clock? Some people take issue with the mobile apps used by ridesharing companies, which usually notify drivers with mobile alerts of fares in the area, prompting drivers to reply immediately to scoop the fare before someone else does. Those people are arguing that these apps are causing drivers to be distracted from their primary task at hand—driving.

But if we’re going to pose that argument, are we going to start holding Verizon Wireless, AT&T, Apple, and Android responsible for distracted driving cases involving cell phones? As drivers, we are obligated to drive responsibly, and that means making responsible decisions while we’re on the road. Uber doesn’t instruct their drivers to use the app while their vehicles are in motion, just as cell phone providers don’t either. If an independent contractor acts with negligence, companies like Uber are protected by the differentiation between independent contractors and employees.

The founder of RelayRides, another ridesharing company, Shelby Clark, says it best, “These are 21st century businesses that are operating with 20th century laws. That’s what the issue is.” There are a lot of questions that are circulating with regard to who should be held liable in such a scenario, especially when it comes to civil lawsuits. What do you think? Who should be held liable? Let us know on Twitter!