Uber Sues Drivers’ Insurer Alleging Its Claims Practices Have Fueled Tort Litigation

Uber Technologies last Friday sued its drivers’ auto insurer for defense and indemnification regarding multiple lawsuits that are seeking to hold Uber vicariously liable for accidents involving some of its drivers in New York.

Uber’s complaint cites 23 lawsuits that relate to claims from accidents involving different Uber drivers that happened between August 2016 through July 2023. These lawsuits seek to hold Uber liable for the accidents based upon the drivers’ use of Uber’s app for lead generation and payment processing.

The technology company maintains that the insurer for the drivers, American Transit Insurance Co. (ATIC), has a “pattern and practice of failing to adhere to reasonable claims-handling practices and failing to reasonably resolve claims and lawsuits on its insureds’ behalf.”

Uber maintains that ATIC’s failure to resolve the claims of some of its drivers has led to the liability lawsuits. The insurer’s practices have had the “knock-on effect of provoking unnecessary tort litigation involving insured for-hire drivers and Uber, whereby ATIC has, in practice, forced claimants to ask Uber to unreasonably step into the shoes of ATIC’s insurance coverage obligations,” according to the complaint.

ATIC has denied coverage claiming that Uber is not an insured under the drivers’ policies. ATIC says Uber was not a named insured on the declarations pages and does not qualify as an insured because it was not using the covered autos. In its denial, it further asserted that Uber is not liable for the conduct of any insured.

Even if Uber is an insured, ATIC added, Uber violated the notification and cooperation provisions of the policies. The insurer says Uber did not notify it of the accidents “as soon as reasonably possible” as required under the policies and that by the time it did, Uber had already retained counsel, made payments, and incurred expenses without the insurer’s consent. ATIC denies any obligation to reimburse Uber.

The insurer further contends that the alleged notification and cooperation failures by Uber and the bulk nature of Uber’s claim tender on September 25, 2023 —a letter with nine pages of more than 500 cited cases— are prejudicial to it.

Uber’s Argument

Because the underlying lawsuits seek damages for bodily injury against Uber arising out of the actions of ATIC insureds, Uber says it qualifies as an insured under the policies and ATIC is therefore obligated to defend and indemnify it against the allegations that it is responsible for the conduct of another “insured.”

Uber argues the actual conflict with ATIC allows for its hiring of independent counsel to represent it.

Drivers-for-hire in New York City are licensed by the Taxi & Limousine Commission (TLC). To use the Uber app, each driver is required to maintain a commercial auto liability policy that provides protection against bodily injury and property damage to third parties at levels of coverage that satisfy all applicable laws.

The complaint says that every allegedly at-fault driver in each underlying lawsuit had a required commercial auto liability policy issued by ATIC with limits of at least $100,000, which is the minimum required.

Also, according to Uber’s agreement, each driver must add Uber to the insurance policies as an additional insured, as well as agree to indemnify, defend and hold harmless Uber, its affiliates, officers and employees for any claim by a third party.

Uber said it has paid and will continue to pay “substantial amounts” to defend the underlying lawsuits. Further, Uber maintained it will incur additional damages in settlements and judgments.

Uber is asking the court for a declaratory judgment that ATIC has a duty to defend and indemnify it in the underlying lawsuits and that Uber has a right to be defended by independent counsel of its choosing, with legal fees paid by ATIC. Uber is also seeking money damages for alleged breach of contract, attorneys fees and any legal liability.

Uber filed its suit in federal district court in Manhattan.