What Uber & Lyft Drivers Need to Know About Their Car Insurance
You may have heard of Uber, Lyft and Sidecar. These taxi network companies utilize mobile apps, allowing consumers with smartphones to submit a trip request which is then routed to local drivers who use their own cars. 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.
Through a recent lawsuit in California, an insurance gap problem was discovered for rideshare drivers. How does automobile insurance work in a claim against an Uber or Lyft driver? Who has the insurance – the driver or the company? Apparently, the driver is only covered by the taxi network company (TNC) when an actual paying customer is physically in the vehicle. The driver’s personal insurance only covers the driver’s vehicle when the TNC mobile is not in use. Once the driver is searching for a passenger through the app in their vehicle, the insurance company considers them to be operating a business which is not covered by a personal policy. The driver is left without coverage during this “gap” period.
Fortunately, the insurance industry is beginning to offer endorsements to personal policies or commercial auto policies to cover this gap in coverage for rideshare drivers. Here a few more questions and answers you may want to consider when deciding if rideshare driving makes sense to you:
Auto Ride Sharing Frequently Asked Questions (FAQs)
Q: Are Ride Sharing Services excluded in a personal lines base policy?
A: Personal auto policies includes a provision that excludes liability and other coverages that arise out of the ownership or operation of a vehicle while it is being used or during the period of time it is available for hire as a public or livery conveyance.
Q: Do any companies provide a coverage endorsement for Ride Sharing Services?
A: Yes. An optional Limited Ride Sharing Coverage endorsement is available by a limited number of insurance companies providing coverage for individuals who drive passengers through ride sharing apps, like Uber or Lyft.
Q: What Coverage Does a Typical Limited Ride Sharing Endorsement Provide?
A: The Limited Ride Sharing Coverage endorsement affords coverage for the period of time when covered drivers of a specific eligible vehicle are available for hire as a public or livery conveyance, up until they accept a request for transportation of a person for a fee and no passenger is occupying the vehicle.
Q: Is the Endorsement Offered on a Vehicle or Policy Basis?
A: The Limited Ride Sharing Coverage endorsement is currently offered by limited companies on a vehicle basis and only when liability coverage is afforded for that specific vehicle. When this endorsement is added, the Limited Ride Sharing Coverage is applicable to each of the coverage sections purchased for that vehicle including Liability, Med Pay, PIP, UM/UIM and Damage to Your Auto.
Q: What is the Cost of the Endorsement?
A: The premium for the Limited Ride Sharing Coverage endorsement is approximately 10 percent of the specific vehicle’s total premium. If liability coverage is removed from the specific vehicle, then the Limited Ride Sharing endorsement will also be removed from the vehicle. This rate may change as additional companies begin to offer this endorsement.
Please call our office and speak with one of our agents 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. Again, this is a relatively new industry and our insurance companies are beginning to respond with new coverage options.