What Uber & Lyft Drivers Need to Know About Their Car Insurance
Ride-sharing is becoming more and more popular and companies like Uber are growing considerably all across our country. Insuring vehicles that are providing ride-sharing services has created quite a lot of discussion over the last year as insurance companies adapt to the need for insurance for this new exposure. So what is ride-sharing and why is it getting so much attention from insurance companies?
According to the Insurance Information Institute, ride-sharing companies provide taxi-like services by connecting passengers to drivers via a smart phone app. Rides can be arranged in advance or on short notice. The official name for a ride-sharing business is a Transportation Network Company (TNC). TNCs contract with drivers who use their personal vehicles to transport passengers. Therefore, many of the drivers who work for TNCs do not have a livery driver’s license, and their cars are neither registered nor insured as commercial vehicles. These drivers are distinct from limousine or taxi drivers, who use a commercial vehicle and already have commercial insurance coverage.
Insurers and insurance regulators are concerned about misconceptions regarding the use of personal auto policies by TNC drivers. Personal auto insurance policies are not designed, underwritten or priced for commercial ride-sharing; indeed, they typically exclude “livery services.” The assumption is that private-passenger motorists drive themselves, family members and friends, and have an average annual travel of 12,000 miles–and, of course, that no money is earned from these private trips.
Generally a standard personal auto policy will not provide coverage for ride-sharing. A standard personal auto insurance policy stops providing coverage from the moment a driver logs into a TNC ride-sharing app to the moment the customer has exited the car and the transaction is closed. Thus a coverage gap is created, where no coverage is in place for a driver with a personal standard auto policy. Recognizing this coverage gap, many of our insurance carriers have created an endorsement to “fill” this insurance gap (the portion not covered by the TNC company) by offering Auto Ridesharing Coverage endorsements for drivers who work for companies such as Uber or Lyft.
This particular endorsement will be available for any driver using their personal auto for a TNC. This endorsement covers you and your auto during the “ride-sharing gap,” from the time the TNC app is turned on until a customer accepts a ride. The endorsement can be added at the time a new policy is written. The cost of the endorsement should be fairly reasonable with the premium being a percentage of your vehicle’s premium. Typically the premium will average around $100 annually.
If you currently drive as a “driver-for-hire” for one of these companies, or are considering doing so in the future, you need to understand your insurance exposure, coverage and options. Please call our office and speak with one of our agents or trained insurance professionals if you are currently operating as a rideshare driver or want more information on the insurance costs involved. We don’t want you to have an unexpected lapse in coverage through your new business operations.