You get hit by a car. The driver has a rideshare sticker in the window. You assume the rideshare company’s insurance will cover your medical bills and damage. Then you find out the driver was not carrying a passenger. The app was on, but the driver was waiting for a request. That changes everything. In the world of rideshare and taxi collisions, the single most important factor is not who crashed into you, but what the driver was doing at the exact moment of impact. And the difference between a taxi and a rideshare can cost you tens of thousands of dollars.

Taxis are simple. A taxi is a commercial vehicle. It is owned or operated by a company that carries commercial insurance. When a taxi hits you, that company’s policy is primary. You deal with one insurer. The driver’s personal auto insurance is irrelevant. The taxi company has skin in the game because the vehicle is used for business around the clock. There is no gray zone. You are covered for the full limits of that commercial policy, which are usually high enough to handle serious injury claims.

Rideshare is not simple. Uber and Lyft have designed their system to push you through three distinct periods of activity. Period one: the driver has the app on and is driving around waiting for a request. Period two: the driver has accepted a request and is driving to pick up the passenger. Period three: the passenger is in the car and the trip is underway. Each period carries different insurance coverage. And period one is where you get hurt.

Here is the brutal fact. During period one, the rideshare company provides liability coverage that is much lower than during periods two and three. In many states, that coverage is only $50,000 per person and $100,000 per accident for bodily injury. That is the bare minimum in some places. If you have a serious injury, $50,000 will evaporate after a single ambulance ride and one night in the hospital. Meanwhile, the driver’s personal auto insurance will almost certainly deny coverage. Why? Because personal policies contain a livery exclusion. That exclusion says the policy does not cover accidents that happen while the vehicle is being used for commercial purposes. A driver with the app on, waiting for a fare, is engaged in commercial activity. So the personal insurer says no. You are left with the rideshare company’s $50,000. If your damages exceed that, you have to chase the driver personally. Most drivers do not have significant assets.

Now consider the app being off. If the driver is not logged in, they are just a regular person driving a regular car. Their personal insurance applies normally. If they are at fault, you get the full limits of their policy. That might be $100,000 or perhaps more. It is not great, but it is better than the rideshare loophole. The problem is you cannot tell from the outside whether the app is on or off. The driver might say they were off duty. The rideshare company might claim they were not logged in. You need the trip data, and you need a lawyer to subpoena it. The company will not volunteer it.

Taxis avoid this mess because the driver is always commercial. There is no livery exclusion. The taxi company’s insurer cannot deny coverage on the grounds that the driver was not carrying a passenger. A taxi driver on the way to a call, or parked waiting at a stand, is still working. The commercial policy covers it. That is why taxi accidents tend to settle faster and with less friction. Rideshare accidents, by contrast, become a three-way fight between you, the driver’s personal insurer, and the rideshare company’s captive insurance. Each one points fingers at the other. You sit in the middle while your medical bills pile up.

What should you do if you are hit by a rideshare driver? Do not leave without obtaining the driver’s phone. That sounds aggressive, but the screen will show whether the app is active and what period the driver was in. Take a photo of that screen. Also demand the driver’s insurance card, but remember that card is for their personal policy, which may be useless. Get the driver’s full name, phone number, and license plate. Report the accident to the rideshare company yourself, using the in-app safety feature, if you can. Do not rely on the driver to report it. They have every incentive to say the app was off.

The bottom line is that rideshare liability is a patchwork. Taxi liability is a solid blanket. When you are injured, you need the blanket. If you are caught in the gap, you need a lawyer who knows the difference between period one and period two. Because the rideshare company will offer you a check for $50,000 and call it fair. It is not fair. It is a loophole, and it is yours to close.