Yeah, that is a huge grey area right now. Supposedly the companies cover you when you are online. Your personal insurance definitely WILL NOT cover you if they find out you are doing this.
Lawsuits are in the future.
Yeah, horrible deal for the drivers because of this.
Wear and tear on your own personal vehicle, no guarantee of insurance coverage (0 if you're at fault, and iffy if someone else is), it's just a bad deal for the drivers. And then add the risk of getting robbed or your vehicle damaged by a passenger, and since you're not a "real" employee of Uber or Lyft, who's going to cover it?
That said, as a consumer, it's excellent, prices are lower, service is better, the drivers generally speak English well and are pleasant, the drivers are generally better than taxis, and you can call them to pick you up wherever you are. There's been similar pick-up services for taxis, but in my experience, taxis have been very unreliable in actually picking me up.
Most of the taxis around me only want to take cash anyway.