Uber is a tech-based ridesharing company that connects passengers and drivers using a smartphone app. While not yet available in Wisconsin, the company offers its services in most major cities, including Minneapolis.

The concept offered by Uber and other similar companies has been largely praised for providing inexpensive transportation while reducing fuel consumption and emissions.

However, because the service involves drivers who are essentially working as independent contractors using their own vehicles to cart around passengers when they feel like it, it presents an insurance nightmare when tragedy strikes.

Essentially, the services offered by companies like Uber fall into a gray area between personal and commercial insurance coverage, which can lead to a lot of finger pointing when a serious accident occurs.

Such is the case in a lawsuit following a fatal accident in California that involved an Uber driver. The fatal accident claimed the life of a 6-year-old girl who was struck by the Uber driver on New Year’s Eve.

The family of the 6-year-old filed suit against Uber, but the company has denied liability because the driver did not have an Uber passenger on board at the time of the accident. The company says their million-dollar insurance policy only kicks in when Uber drivers get into accidents with passengers in their cars.

But the driver’s personal auto insurance company is also crying foul. They say personal insurance policies aren’t intended to cover drivers who are providing a livery service, or driving for pay. They argue that Uber drivers should have to pay extra for commercial policies.

Unfortunately, innocent accident victims are the ones to suffer when they fall into the gap between personal and commercial insurance. That’s why many states and cities are working quickly to implement better policy surrounding the ridesharing companies.

Source: Insurance Journal, “Transportation Network Companies, Uber Liability Gap Worry Insurers,” Don Jergler, Feb.10, 2014