Dara Khosrowshahi, CEO of Uber, said during the company’s May 7 Q1 earnings call that more than 30% of fares in New Jersey are allocated to insurance costs. He attributed this to fraudulent legal practices and abuse of the legal system, which complicate operations in New Jersey and other states.
“California and New Jersey are quite problematic,” said Khosrowshahi. “About 30%-plus of the average Uber fare is eaten up by insurance, much of which comes from kind of fraudulent legal practices, abuse of legal practices, staged accidents, et cetera. I don’t want to throw out a number, but it is significant.”
According to a report in InsuranceBusinessMag, Uber has been advocating for insurance reform in New Jersey. The state’s high insurance mandates significantly increase costs for both drivers and riders. Specifically, New Jersey requires rideshare companies to carry $1.5 million in uninsured/underinsured motorist (UM/UIM) coverage—50 times more than what is required for personal vehicles—making it one of the most expensive states for rideshare insurance. Nearly one-third of every fare goes toward insurance costs, impacting service affordability and putting pressure on drivers’ earnings. The company also expresses concern over fraudulent claims exploiting the state’s no-fault insurance systems. As part of a broader coalition, Uber supports stricter regulation of litigation financing, which it says fuels costly lawsuits.
A study from the U.S. Chamber Institute for Legal Reform indicated that New Jersey’s tort system costs exceed $5,500 per household, ranking it among the highest in the nation. The report attributes these high costs to the state’s expansive liability environment and the significant influence of the plaintiffs’ bar.
A report from the American Tort Reform Association (ATRA) found that lawyers in New Jersey spent $105.3 million on legal services advertisements in 2023. ATRA President Sherman “Tiger” Joyce said that trial lawyers continue to invest heavily in ad buys because they can boost settlements and payouts when targeting large corporations, ultimately increasing their contingency fees. Joyce described these large advertising campaigns as “another aggressive tactic employed by trial lawyers to solicit clients,” often using dubious claims. Due to these “excessive” lawsuits, each New Jersey resident incurs an additional cost of approximately $1,757 annually.
Dara Khosrowshahi has been leading Uber’s global operations across more than 70 countries since 2017. Before joining Uber, he was CEO of Expedia, where he expanded the company through key acquisitions and mobile innovation.
