Rideshare vs. Taxi Accidents: What Makes Liability and Insurance Different?

In Texas cities like Austin, rideshare services like Uber and Lyft have largely replaced traditional taxis as the preferred mode of on-demand transportation. But when accidents happen, determining liability and accessing insurance coverage can be significantly different depending on whether the crash involved a rideshare vehicle or a traditional taxi. Understanding these differences is critical if you’ve been injured as a passenger, another driver, or even a pedestrian. Liability, insurance coverage, and claims procedures vary between taxis and rideshare services due to how these services operate under Texas law.

How Rideshare and Taxi Services Operate Under Texas Law

Rideshare (Uber, Lyft)

Rideshare companies like Uber and Lyft are classified in Texas as Transportation Network Companies (TNCs) under Texas Occupations Code Chapter 2402. These companies use a digital platform to connect passengers with drivers who are independent contractors—not employees.

Because of this classification, TNCs are not directly liable for a driver’s negligence unless specific exceptions apply (such as negligent hiring or failure to deactivate a dangerous driver). However, TNCs are required by law to provide specific insurance coverage during different phases of a trip.

Taxi Companies

Taxi drivers are typically employees or contractors working for regulated taxi companies. These companies must register with local municipalities and comply with local ordinances governing driver background checks, vehicle maintenance, and commercial insurance.

Unlike TNCs, taxi companies can often be held vicariously liable for the negligent acts of their drivers under respondeat superior, a legal doctrine that assigns liability to employers for actions committed by employees within the scope of their job.

Key Differences in Liability

1. Employment Status of Drivers

• Rideshare Drivers: Independent contractors. Generally, the rideshare company avoids liability unless gross negligence or company-level misconduct is proven.
• Taxi Drivers: Often employees or tightly affiliated contractors. Taxi companies may be held directly liable for driver negligence.

2. Corporate Liability

• Rideshare Companies: Protected from direct liability in most cases due to independent contractor status.
• Taxi Companies: More vulnerable to vicarious liability for their drivers’ actions.

3. Negligence Claims

In both cases, a personal injury claim will hinge on proving negligence. However, holding a rideshare company accountable is more complex due to legal barriers protecting them from most forms of direct liability.

Insurance Coverage: Rideshare vs. Taxi

Insurance Coverage for Rideshare Accidents

Texas law requires TNCs to carry tiered insurance coverage depending on the driver’s activity at the time of the accident. The following applies:

Period 0 – Driver is offline (not using the app):

• Personal insurance applies. No TNC liability. 

Period 1 – Driver is logged into the app but hasn’t accepted a ride:

• Minimum coverage required: 
  • $50,000 per person for bodily injury
  • $100,000 per accident
  • $25,000 for property damage

Period 2 – Driver has accepted a ride and is en route to pick up the passenger:

• $1 million liability coverage applies.

Period 3 – Passenger is in the vehicle (until drop-off):

• $1 million liability and uninsured/underinsured motorist coverage applies.

This structure is dictated by Texas Insurance Code §1954.052 and applies statewide.

Insurance Coverage for Taxi Accidents

Taxis must carry commercial auto insurance, typically with the following minimums:

• $300,000 – $500,000 in liability coverage
• Coverage may vary by city ordinance (e.g., Austin, Houston, Dallas have distinct rules)
• No tiered coverage – commercial insurance applies at all times

The key advantage for victims in taxi accidents is that commercial insurance is constantly active, making it somewhat simpler to pursue compensation.

Who Pays After an Accident?

If You’re a Passenger:

• Rideshare Accident: The rideshare company’s insurance may cover your injuries if the driver was “on the clock” (Period 2 or 3).
• Taxi Accident: The taxi company’s commercial policy usually covers your injuries regardless of trip status. 

If You’re in Another Vehicle:

• You may need to pursue a claim against: 
  • The rideshare driver’s personal insurance if they were offline.
  • The TNC’s insurance if they were active on the app.
  • The taxi company and its insurer for taxi-related crashes.

If You’re a Pedestrian or Cyclist:

• You can pursue damages from:
  • The driver directly
  • The rideshare or taxi company, depending on the driver’s status
  • Possibly your own uninsured/underinsured motorist (UM/UIM) coverage

Challenges in Rideshare Accident Claims

Unlike taxi accidents, rideshare claims are more complex due to the multi-layered insurance structure and driver classification loopholes. Common hurdles include:

• Determining the driver’s app status
• Delayed responses from insurance adjusters
• Disputes between personal and TNC insurance over who is responsible
• Rideshare companies distancing themselves from liability

An experienced personal injury attorney can subpoena digital records, app logs, and other evidence to prove the driver’s status and trigger the appropriate insurance policy.

Comparative Fault and Texas Law

Texas follows a modified comparative fault rule under Tex. Civ. Prac. & Rem. Code §33.001. This means you can recover damages only if you were less than 51% at fault for the accident.

In both rideshare and taxi accidents, insurance companies may attempt to shift blame onto the injured party to reduce payouts. Legal representation helps protect your claim and ensure fault is assessed fairly.

What to Do After a Rideshare or Taxi Accident

If you’re involved in a rideshare or taxi accident in Texas:

1. Call 911 and seek medical attention.
2. Document the scene – photos, license plate, driver name, and vehicle details.
3. Request ride details if using a rideshare app (screenshot your trip).
4. Obtain witness statements, if possible.
5. Do not give recorded statements to insurance without legal counsel.
6. Contact a personal injury attorney experienced in commercial vehicle claims.

Statute of Limitations in Texas

Under Tex. Civ. Prac. & Rem. Code §16.003, you have two years from the date of the accident to file a personal injury lawsuit. Failing to file within this timeframe can result in a permanent loss of your right to recover damages.

Why Legal Help Is Critical

Both taxi and rideshare accidents involve layers of legal complexity—from insurance coverage analysis to liability disputes and negotiating with commercial insurers. Rideshare companies often rely on legal teams to limit their exposure, and taxi companies may deny liability altogether.

Having a knowledgeable attorney from Dang Law Group ensures your rights are protected and your claim is positioned for the best possible outcome.

Contact Dang Law Group for a Free Consultation

If you’ve been injured in a rideshare or taxi accident in Texas, the legal team at Dang Law Group is here to help. We have the experience and resources to hold negligent drivers and the companies behind them accountable. Don’t let insurance companies take advantage of you.

Call us today or fill out our contact form to schedule your free, no-obligation consultation.