A Kentucky Lyft Driver Was Hurt on the Way to a Pickup. Why Did Neither Policy Pay Underinsured Benefits?

Was she already on a Lyft trip?

Yes, for this appeal. Rogers’s affidavit said she was logged into Lyft, had accepted a request, and was on the way to the passenger. The court treated that as a prearranged ride.

The opinion uses the version of KRS 281.010 in effect on the date of the accident. Under KRS 281.010(42) as it then read, the trip began when the driver accepted the request. The statute was amended and renumbered effective January 1, 2023. The court did not apply the later numbering.

The lawsuit

Rogers filed her complaint on August 31, 2022, in Fayette Circuit Court, No. 22-CI-02508. She named Lyft, Allstate, and Erie. She claimed that Lyft broke Kentucky’s rideshare insurance rules by not carrying underinsured coverage, that the failure was negligence per se, and that Allstate or Erie owed her the benefits.

Allstate said it had issued Lyft a business auto policy that was in effect at the time of the accident. Allstate also said Lyft rejected underinsured coverage, so the policy did not provide it. Lyft said the insurance it bought complied with the law, and that underinsured coverage was optional under KRS 304.39-320(2). Erie said its policy excluded the coverage when a car was hired or available for hire by the public.

On April 3, 2023, the circuit court ruled for all three. The appeals court wrote that the judgment “contained no legal reasoning or analysis.” Erie had moved for judgment on the pleadings. The appeals court reviewed that ruling as a summary judgment because the record included matters outside the pleadings. Allstate and Lyft had moved for summary judgment.

What the policies said on the accident date

Two policies were in play on February 1, 2022. Erie insured Rogers’s vehicle. Allstate insured Lyft under a business auto policy. The coverage question turned on the language of those policies at the time of the accident, not on a later version.

Allstate’s position was that Lyft had rejected underinsured motorist coverage. The policy in effect that day therefore did not include it. The court agreed that Lyft did not have to provide the coverage for Rogers at the time of the accident, because Lyft had not requested it.

Erie’s policy included underinsured coverage, then excluded it in a specific situation. The exclusion said the insurance does not apply to injury while occupying or using an insured auto “while hired by or rented to others for a fee, or while available for hire by the public.” An exception could restore coverage if the declarations page identified the car for business use and the car was used as a transportation network company partner.

Why Lyft’s policy did not pay

Rogers argued that 601 KAR 1:113 made underinsured coverage mandatory on a prearranged ride. Section 3(4)(d) of that regulation requires underinsured vehicle coverage in accordance with KRS 304.39-320. The court read the regulation and the statute together.

KRS 304.39-320(2) says every insurer shall make underinsured motorist coverage available upon request. The court held that the coverage is not compulsory. It must be offered on request. Lyft had not requested it, so the Allstate policy in effect at the time of the accident did not include it. Lyft was not required to provide it for Rogers at the time of the accident.

The court also rejected the argument that Section 3(5) required Lyft to buy the coverage. That subsection addresses the liability insurance required for a prearranged ride. It does not set the underinsured-motorist rule.

Why Erie’s policy did not pay

The court wrote: “The UIM exclusion is plain and unambiguous.” Rogers had accepted the Lyft request and was on the way to the passenger when the accident happened. The court held that the passenger had hired the car by then, so the exclusion applied.

The declarations page listed the use as “To work 10-14.” The court read that phrase as commuting, not as business use. Rogers agreed in the trial court that Erie had not rated the car for business use. The exception to the exclusion did not apply. She was not entitled to underinsured benefits under the Erie policy.

The public-policy argument

Rogers argued that public policy should require Lyft or Erie to pay. The court disagreed. It cited Kentucky Supreme Court precedent that underinsured exclusions are not barred by public policy. It also said lawmakers could have made the coverage compulsory for rideshare drivers and had not done so. A driver can disclose business use and request a policy rated for that use.

Judge Taylor wrote the opinion. Judges Cetrulo and Lambert concurred. The judgment for Lyft, Allstate, and Erie stood.

Case timeline

• February 1, 2022: Rogers, logged into Lyft and driving to a pickup she had accepted, is injured in an accident caused by another driver. State Farm pays its liability limits.
• August 31, 2022: Rogers sues Erie, Allstate, and Lyft in Fayette Circuit Court, No. 22-CI-02508.
• April 3, 2023: The circuit court rules for all three defendants.
• April 19, 2024: The Kentucky Court of Appeals affirms in a published opinion, No. 2023-CA-0447-MR.

Underinsured coverage is not uninsured coverage

This case was about underinsured motorist benefits. Both Erie and Allstate had denied that claim. The court decided that claim.

The regulation lists the two coverages on separate lines. During a prearranged ride, Section 3(4)(c) refers to uninsured vehicle coverage in accordance with KRS 304.20-020. Section 3(4)(d) refers to underinsured vehicle coverage in accordance with KRS 304.39-320. The same split appears for the period when a driver is logged on but not yet on a prearranged ride.

The appeal did not decide whether uninsured coverage was offered, purchased, or owed. Section 4(1)(c) is a different sentence. It says a Kentucky automobile insurer may exclude uninsured and underinsured motorist coverage on a driver’s personal policy while the driver is logged on to the app or providing a prearranged ride. That is permission to write an exclusion. It is not a finding that an uninsured-motorist claim was paid or denied in this case.

The Kentucky Uber and Lyft insurance guide discusses underinsured motorist coverage. The guide is not a substitute for the policy language in effect on the accident date.

Sources and case materials

• Kentucky Court of Appeals, Kimberly Rogers v. Erie Insurance Exchange; Allstate Insurance Company; and Lyft, Inc., No. 2023-CA-0447-MR, opinion affirming, April 19, 2024, published at 688 S.W.3d 527
• Full opinion text, No. 2023-CA-0447-MR (CourtListener)
• Kentucky Court of Appeals published opinions list, April 2024 (PDF)
• 601 KAR 1:113, Transportation network company insurance requirements

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