Ridesharing and Insurance
You’ve probably heard of ridesharing companies by name, such as Lyft® and Uber®. But, do you know enough about these and other Transportation Network Companies (TNCs) to protect yourself in the event of a loss? Ridesharing is still a new concept in the insurance industry and the laws and regulations for this activity are evolving. The following information is intended to provide a basic overview of ridesharing as it currently exists. It is in your best interest to discuss all insurance coverage questions, needs, and potential exposures with your local independent insurance agent.
How is using a TNC different than using a taxi?
A taxi service is regulated by laws designed to protect drivers and passengers. As such, a taxi service must be licensed and meet certain standards in order to purchase taxi insurance.
TNCs such as Lyft® and Uber®, on the other hand, are not entirely regulated by laws at this point. Drivers need a valid driver’s license, must own a car, and must meet TNC driver requirements, which vary from company to company. The majority of drivers use their own personal auto for ridesharing services. These services are scheduled and tracked using mobile technology. It is through this technology that passengers request rides and drivers accept a payment or “donation” by credit card for the service.
Are ridesharing companies, drivers, and passengers insured?
This question is at the heart of the complex issues that come into play when losses result from using a TNC. TNC drivers are likely using their personal vehicles, and personal auto insurance generally excludes coverage when the auto is used to transport passengers for a fee (aka livery service).
A few TNCs have indicated a willingness to provide some protection by covering the commercial exposure for liability and collision coverage faced by drivers. However, coordinating coverage between commercial and personal auto policies is complex and often leads to uninsured gaps in coverage.
Are passengers protected while riding in these vehicles?
Your personal auto policy may provide some coverage if you are hurt in an accident while a passenger in one of these vehicles. If you do not have a personal auto policy because you do not own a vehicle, talk to your independent insurance agent about purchasing a “named non-owner” policy.
Before becoming a driver or passenger through a TNC, do your homework. Research the TNCs that operate in your area and find out if they provide insurance coverage for drivers and passengers, and ask for the liability limits. You should also contact your local independent insurance agent and discuss potential exposures you might face as either a driver or passenger.
Is ridesharing really worth worrying about?
Yes. Determining if insurance coverage exists depends on the timing and circumstances of an accident, among other things. Settling personal auto losses can be difficult without adding in the coordination of coverages between personal and commercial auto insurance policies. At this time, coverage gaps still exist in many circumstances that might let both the driver and passenger exposed to uninsured damages.
The most important step you can take is to discuss ridesharing exposures with your local independent insurance agent before becoming a driver or passenger. He or she will be able to provide the best advice regarding coverage options and can recommend an insurance strategy to help minimize your losses.
Source – Insurance Agents & Brokers