Uber Targets California, New York in Insurance Reform Campaign
Uber is escalating its campaign for insurance reform, claiming that excessive state-mandated insurance requirements are driving up costs for both drivers and riders. The rideshare giant, already one of the largest insurance consumers in the country, believes existing policies disproportionately impact transportation network companies (TNCs) compared to other commercial vehicles, like taxis and limousines. In addition, Uber is engaged in legal battles over alleged insurance fraud and growing costs related to lawsuit financing. Uber is calling on lawmakers to implement reforms that would alleviate the financial burden on its drivers and customers.
One of Uber’s primary concerns is the significant disparity in required insurance coverage for rideshare vehicles compared to personal cars and traditional taxis. In states such as California and New York, TNCs must maintain liability coverage of at least $1 million per trip – significantly higher than the typical requirements for personal vehicles. In stark contrast, personal vehicles are often only mandated to carry coverage around $30,000. Some states also require rideshare companies to provide uninsured and underinsured motorist (UM/UIM) coverage, often at amounts dramatically higher than those for other road users. For instance, in New York, Uber drivers are mandated to have $1.25 million in UM/UIM coverage, compared to just $50,000 for private vehicle owners. The figures are even more extreme in New Jersey, which mandates $1.5 million UM/UIM coverage — 50 times what is required for personal vehicles.
These elevated coverage stipulations dramatically boost operating costs for Uber, expenses ultimately passed on to riders. According to company estimates, in states like California and New Jersey, roughly a third of a rider’s fare is allocated to state-mandated insurance costs. Meanwhile, states with more moderate insurance regulations, such as Washington, D.C., and Massachusetts, allocate less than 5% of rideshare fares to insurance expenses. Uber argues that these discrepancies create an unfair financial burden on both its drivers and customers.
Adding to Uber’s frustration is what it describes as the exploitation of high insurance requirements. The company recently filed a racketeering lawsuit against a network of law firms, doctors, and clinics. Uber alleges these entities have staged fake car accidents and pushed for unnecessary medical procedures to exploit New York’s no-fault insurance policies. The lawsuit claims that these schemes involved fraudulent medical claims and invasive surgeries for pre-existing or exaggerated conditions.
Uber is not alone in its concerns about insurance costs and fraud. New York’s largest taxi insurer, American Transit Insurance Company (ATIC), is also facing financial difficulties. Following about $700 million in net losses in 2024, regulators are investigating its solvency. ATIC attributes a significant portion of its financial struggles to widespread fraud, similar to the schemes outlined in Uber’s lawsuit. The insurer has responded by filing its own $450 million racketeering lawsuit against medical providers and attorneys accused of exploiting the no-fault system.
Uber’s push for insurance reform also incorporates broader legal issues, particularly the increasing influence of third-party litigation financing. The company supports a coalition advocating for stricter oversight of lawsuit lenders, arguing that unchecked legal funding has contributed to surging insurance costs. The coalition, Consumers for Fair Legal Funding (CFLF), is calling for greater transparency in lawsuit lending practices, including interest rate caps and disclosure requirements. Uber officials argue that litigation financing has fueled an increase in personal injury lawsuits against the rideshare industry, leading to higher settlements and, in turn, higher insurance premiums.
The insurance reform debate has significant implications for Uber’s business model, particularly in states with high insurance costs. Uber CEO Dara Khosrowshahi has stated that lowering insurance costs is a top priority, particularly in California, where overregulation has made it difficult to operate profitably. To address these challenges, Uber has increased its lobbying efforts at both the state and federal levels, advocating for lower liability coverage requirements and measures to combat fraudulent claims.
Despite Uber’s efforts, critics argue that the company’s focus on lowering insurance costs could compromise consumer protection. Opponents of Uber’s proposals claim that reduced insurance coverage would limit the financial recovery options for accident victims. They also contend that Uber should address concerns about legal exploitation through better enforcement of existing fraud laws rather than through deregulation.
As the debate intensifies, lawmakers face increasing pressure to balance consumer protection with ensuring affordable and accessible transportation services. With lawsuits and potential legislative battles on the horizon, Uber’s campaign for insurance reform is expected to remain a central talking point in the coming months.
