Drive at Your Own Risk: Uber Violates Unfair Competition Laws by Misleading Uberx Drivers about Their Insurance Coverage

By Davis, Jennie | Boston College Law Review, January 1, 2015 | Go to article overview

Drive at Your Own Risk: Uber Violates Unfair Competition Laws by Misleading Uberx Drivers about Their Insurance Coverage


Davis, Jennie, Boston College Law Review


INTRODUCTION

On New Year's Eve of 2013, around eight o'clock at night, six-year-old Sofia Liu was walking in downtown San Francisco with her mother and four-yearold brother.1 As the family crossed a street in a crosswalk, a Honda sport utility vehicle taking a right-hand turn failed to yield to the pedestrians and struck the Liu family.2 Sofia's brother and mother survived the accident, but Sofia did not.3 As it turned out, the driver of the Honda was an uberX driver.4 Although the uberX driver did not have a passenger at the time, he was logged into the Uber Technologies, Inc. ("Uber") mobile phone application ("app") and searching for fares.5 Thus, when Sofia's parents sued the driver for wrongful death, Uber denied that its commercial auto insurance policy covered the driver's liability in between fares.6

As ride-sharing becomes more and more common, so do ride-sharing accidents and subsequent insurance coverage disputes.7 Despite Uber's representations that uberX drivers are adequately insured, some insurance industry experts believe that uberX drivers still face coverage gaps while they drive around searching for fares.8 Indeed some uberX drivers involved in accidents have unexpectedly found themselves without the benefit of Uber's auto insurance.9 Just as with the uberX driver who killed Sofia Liu, Uber denied that its insurance policy covered a Houston uberX driver's medical bills and vehicle repairs after he got into an accident while transporting passengers in December of 2014.10

Based on the discrepancy between Uber's claims about uberX drivers' insurance coverage and the actual coverage drivers receive, injured uberX drivers may be able to sue Uber in California for engaging in unfair business practices.11 Violations of California's unfair competition law ("UCL") could expose Uber and other transportation network companies ("TNCs") to ridesharing drivers' claims for restitution and injunctive relief, as well as negative publicity.12 Accordingly, it is in the best interests of TNCs and ride-sharing drivers to heed the numerous warnings from insurance industry insiders about drivers' insurance gaps.13

This Note argues that Uber's misrepresentations to uberX drivers should be found to violate California's UCL, as they constitute an unfair business practice.14 Part I discusses how ride-sharing apps function and Uber's insurance structure for uberX drivers.15 Part II introduces California's UCL and examines the different tests for unfairness that courts use to determine whether a given business practice violates the UCL.16 Finally, Part III argues that courts should find Uber's misrepresentations about the availability of insurance coverage for uberX drivers to be unfair in violation of the UCL, thereby entitling injured uberX drivers to restitution and injunctive relief.17

I. THERE'S AN APP FOR THAT: UBER'S RISE AND EXISTING INSURANCE COVERAGE FOR UBERX DRIVERS

With the rising popularity of ride-sharing, there is an increasing need to regulate the insurance coverage of ride-sharing drivers.18 This Part examines Uber's rapid expansion into the transportation market and existing insurance coverage for uberX drivers.19 Section A provides a brief background on Uber and its dominance in the ride-sharing market.20 Section B then explores how Uber drivers, particularly uberX drivers, are insured.21 Finally, Section C discusses recent attempts to regulate TNCs that could impact how Uber and other ride-sharing companies structure their insurance.22

A. Giving Them a Run for Their Money: The Emergence of Ride-Sharing Shakes Up the Transportation Industry

As the sharing economy expands, ride-sharing has become a popular and commercially viable peer-to-peer service.23 Ride-sharing is a transportation service whereby people without commercial licenses use their own personal vehicles to provide rides to strangers for a fee.24 Ride-sharing drivers provide customers with door-to-door service to their destinations, just like a taxicab, but the transaction tends to be cheaper and more convenient for the customer. …

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