In a recent opinion, the Federal Court for the Eastern District of PA ruled in favor of a Lyft driver, resolving a dispute over uninsured motorist (UM) coverage in Ahtasham v. Lyft, Inc., No. 2:24-CV-01673-GJP (E.D. Pa. Pappert, J.)
The case centered around a “terms of service agreement” and a driver “guidebook.” The driver alleged Lyft had entered into a Terms of Service Agreement with him in which Lyft agreed to provide insurance coverage while using his vehicle for the business of Lyft. Inc, and concurrently provided him a “driver guidebook” promising “in the event of an accident…our UM/UIM coverage will apply up to $1 million per accident”. After the driver began driving for Lyft, he was informed that Progressive Insurance would “insure him and his vehicle.”
On May 16, 2020, the driver was struck by an uninsured motorist while transporting a passenger. Prior to this incident, Lyft waived the UM/UIM motorist coverage for its Pennsylvania drivers, without informing them. When the driver sought coverage under the policy for his injuries, he was denied due to the waiver. The driver sued the rideshare company for breach of contract. Lyft filed a motion to dismiss and argued the parol evidence barred the language found in the “driver guidebook” and the Guidebook itself was not intended as a rulebook. Despite Lyft’s objections, the judge ruled in favor of Plaintiff and interpreted the contractual language in the driver’s favor. The court found the parol evidence rule did not prohibit the Guidebook language as evidence to explain or clarify ambiguity and found the Service Agreement was sufficiently ambiguous as to Lyft’s obligations to insure its drivers. The court rejected the disclaimer found in the Guidebook. The court denied Lyft’s motion to dismiss and found the driver’s allegations as to the promise of UM/UIM coverage found in the Guidebook sufficient to plausibly state a claim for breach of contract.
This decision is significant because it sets an example for how courts might interpret contractual language related to rideshare drivers and their coverage in cases involving uninsured or underinsured motorists. The case could influence future litigation surrounding insurance disputes in the context of rideshare and how companies provide coverage for drivers.
Questions regarding this opinion may be directed to Sasha B. Munoz.
