If you drive for Uber or Lyft in New Jersey, understanding your insurance coverage could save you from financial disaster. While rideshare services provide some protection, significant gaps exist that could leave you paying thousands out of pocket after an accident.
The National Highway Traffic Safety Administration reports that 40,990 people died in U.S. traffic crashes in 2023, making proper insurance coverage more critical than ever for rideshare drivers.
Understanding New Jersey’s Transportation Network Company Act
New Jersey’s Transportation Network Company Safety and Regulatory Act (N.J.S.A. 39:5H-1 through 39:5H-28) sets specific insurance requirements for rideshare companies. This law, which became effective May 1, 2017, requires companies like Uber and Lyft to provide minimum coverage levels during different driving periods.
The law defines a “prearranged ride” as transportation that starts when a driver accepts a ride request, continues while transporting the passenger, and ends when the passenger exits the vehicle.
Key requirements under the act include:
- Criminal background checks for all drivers
- Vehicle inspections meeting New Jersey standards
- Non-discrimination policies
- Proper identification displays
Insurance Coverage by Driving Period
New Jersey divides rideshare driving into three distinct periods, each with different insurance coverage:
Period 1: App On, Waiting for Rides
When it applies: You’re logged into the rideshare app but haven’t accepted a ride request.
Required coverage:
- $50,000 for bodily injury per person
- $100,000 for bodily injury per accident
- $25,000 for property damage
- Personal Injury Protection (PIP) coverage
The critical problem: This is where most coverage gaps occur. Your personal insurance may deny claims when they discover commercial use, while rideshare companies may argue your personal policy should be primary.
Period 2: En Route to Pick Up Passenger
When it applies: You’ve accepted a ride request and are driving to the pickup location.
Required coverage:
- $1.5 million in liability coverage for bodily injury, death, and property damage
- $1.5 million in uninsured/underinsured motorist coverage
- $10,000 in medical payments coverage for drivers
Period 3: Passenger in Vehicle
When it applies: From when the passenger enters your vehicle until they exit at their destination.
Coverage: Same robust protection as Period 2.
The $1.5 Million vs. $50K/$100K Coverage Gap
The difference between Period 1 and Periods 2-3 coverage represents a massive protection gap:
Period 1 limitations:
- Only $50,000 per person for injuries (insufficient for serious medical costs)
- $100,000 total per accident (inadequate for multi-vehicle crashes)
- Often no physical damage coverage for your vehicle
- Personal insurance companies frequently deny commercial use claims
Periods 2-3 protection:
- $1.5 million covers serious injuries and multiple victims
- Includes comprehensive uninsured motorist protection
- Provides medical payment coverage for drivers
According to the U.S. Department of Transportation, early estimates show 40,990 roadway deaths in 2023, highlighting the importance of adequate coverage.
Personal Injury Protection and Medical Benefits
New Jersey law requires rideshare companies to provide PIP coverage during Period 1, but limits can vary dramatically from $15,000 to $250,000 and up. Companies must also provide $10,000 in medical payments coverage during Periods 2 and 3.
Critical limitation: Your personal auto insurance company isn’t required to provide coverage unless you have a specific rideshare endorsement on your policy.
Lawsuit Limitations: What Rideshare Drivers Need to Know
Unlike regular drivers, rideshare drivers have no protection under New Jersey’s Tort Threshold law. This means:
For rideshare drivers:
- Passengers can sue for pain and suffering regardless of injury severity
- No protection from lawsuits even in minor accidents
- Higher exposure to legal claims compared to regular driving
For accident victims:
- Full compensation available without meeting strict injury thresholds
- Pain and suffering damages remain accessible
- No need to prove “permanent injury” as required in other cases
Real-World Rideshare Scenarios and Coverage
Based on New Jersey law and actual case situations, here’s what happens in different accident scenarios:
Passenger Injured During Active Ride
If you’re injured as a passenger, the TNC’s $1.5 million policy applies. You use your own PIP coverage for medical treatment but can pursue bodily injury claims against at-fault drivers and underinsured motorist claims against the rideshare company.
Driver Injured During Active Ride
Drivers can access up to $10,000 through the rideshare company’s medical payments coverage, plus pursue claims against at-fault parties and the rideshare company’s underinsured motorist coverage.
Driver Waiting for Ride Request (Period 1)
This scenario creates the most problems. Drivers have only limited coverage ($50,000/$100,000), and both personal insurance and rideshare companies often dispute who should pay first.
Food Delivery Services (Different Rules)
Services like DoorDash, Uber Eats, and GrubHub follow different rules. New Jersey case law confirms that food delivery doesn’t qualify for Transportation Network Company protections since it doesn’t involve “prearranged rides” with human passengers.
Common Insurance Denial Tactics
Insurance companies use numerous strategies to avoid paying rideshare claims:
The Primary Coverage Shuffle
Both your personal insurer and the rideshare company may claim the other should pay first, leaving you stuck without coverage.
Commercial Use Exclusions
Personal insurance companies routinely deny claims when they discover commercial activity, even during Period 1 when rideshare coverage is minimal.
Policy Cancellation Threats
Some insurers may drop you entirely when they learn about rideshare driving without proper notification.
Delay and Minimize Tactics
Companies may prolong claims processes or offer quick, insufficient settlements hoping you’ll accept less than you deserve.
Documentation Demands
Excessive paperwork requirements and claims that forms weren’t filed properly provide additional denial opportunities.
Protecting Yourself: Essential Steps
- Purchase rideshare insurance endorsement – This fills critical Period 1 gaps
- Notify your personal insurer – Avoid policy cancellation for non-disclosure
- Document all driving periods – Keep records of when you’re online, en route, or carrying passengers
- Report accidents immediately – Contact both insurers and the rideshare company
- Seek legal help – Complex coverage disputes require experienced representation
Why Choose Grossman Law for Your Rideshare Case
Attorney Scott D. Grossman brings over 20 years of experience fighting for injured victims in New Jersey. He has successfully guided thousands of clients through complex personal injury cases and recovered millions in verdicts and settlements.
Mr. Grossman’s credentials include:
- Board membership with the American Association for Justice
- Active involvement with the Brain Injury Association of New Jersey
- Former Board of Governors member of the New Jersey Association for Justice
- Extensive media interviews on New Jersey insurance law
The Grossman Law Firm has secured impressive results for clients, including:
- $3,650,000 settlement in a truck accident case
- $2,000,000 verdict in an underinsured motorist car accident case
- Multiple million-dollar settlements in complex injury cases
Recent statistics show the firm has helped recover tens of millions of dollars for New Jersey accident victims, making them among the top-rated personal injury attorneys in the state.
Statistics Show the Growing Risk
Research reveals concerning trends in rideshare safety:
- The University of Chicago found accident rates increased from 2 to 3.5 per 100,000 people after rideshare services launched
- Accident-related fatalities increased by 3% annually since rideshare introduction
- These additional accidents cost society an estimated $10 billion according to Department of Transportation analysis
Contact New Jersey’s Premier Rideshare Accident Attorneys
Rideshare insurance claims involve complex legal issues that require experienced representation. The attorneys at Grossman Law understand New Jersey’s Transportation Network Company Act and have successfully handled numerous rideshare accident cases.
Don’t let insurance companies take advantage of coverage gaps or dispute tactics. Our legal team will fight to protect your rights and secure the compensation you deserve.
Call Grossman Law today for a free consultation: (732) 625-9494
Our track record of million-dollar verdicts and settlements demonstrates our commitment to achieving justice for rideshare accident victims throughout New Jersey. We handle cases on a contingency fee basis, meaning you pay nothing unless we win your case.
When you need experienced rideshare accident representation, trust the attorneys who understand the complexities of New Jersey’s insurance laws and have the proven results to back up their expertise.