Ridesharing and Your Personal Auto Policy
Ridesharing for both drivers and passengers may not be so cool if you are not covered.
Ridesharing has become part of our lives. However, passengers and drivers for Transportation Network Companies (TNCs) alike are generally not well informed of the fact that under a personal auto policy, they may not be covered under a number of circumstances.
Why is ridesharing an issue for drivers?
Most standard personal auto policies exclude coverage for “public or livery conveyance.” In other words, the use of the vehicle to transport passengers for a fee. Some policies have even stronger exclusions that exclude any coverage when the driver is available for hire.
Other restrictions could apply, so even if you don’t see a specific exclusion, you should not assume that there is coverage under the personal auto policy. Regulators in many states have been issuing consumer alerts to warn the public about possible implications when signing up as a driver – or as a passenger – with the ridesharing apps.
What if my Transportation Network Company tells me I’m covered when I drive for them?
An increasing number of TNCs are indicating that they are going to cover the driver’s commercial exposure for liability and collision coverage. Some may also offer Uninsured/Underinsured motorist coverage, something that can protect you when you are involved in an accident with an at-fault driver who had insufficient coverage or no coverage at all, which happens all too frequently. You should ask your TNC:
- What they would provide, and
- Whether their coverage would be primary.
How do I know if I’m covered as a driver?
If you are considering becoming a driver for a TNC, you should:
- Find out what the TNC will cover for your commercial exposure, including when coverage starts and when it ends, and
- Talk to your agent about what your personal auto policy may cover if you are involved in an accident.
Although insurance issues are often downplayed by TNCs, the coordination between the commercial and the personal auto policies can pose challenges. The timing and circumstances of the accident will have a bearing on whether coverage is afforded or not. At this time, coverage gaps still exist in a number of circumstances.
Can you give an example?
Examples are a great way to get a better understanding between you and the TNC and/or the insurer and to identify potential gaps. At minimum, you should find out how the TNC will cover you when:
- You are available for hire (logged into the app) but not transporting a passenger.
- You are logged in and transporting a passenger.
- You are logged out and not transporting a passenger.
- You are logged out after dropping off your last passenger, and heading home.
Is this issue settled?
No. Between challenges from Public Utility Commissions, restrictions on licenses to operate, and the Legislature contemplating new laws to address proper insurance coverage, among other things, the issue is not settled. While we do not provide any optional coverage specific to this use, we will continue to follow the personal auto industry’s response to closing these coverage gaps.
Used with permission from Insurance Agents & Brokers © 2015
Why is ridesharing an issue for passengers?
Ridesharing is not the same as riding in a taxi or limousine. Taxis are licensed by the state or a local authority and subject to strict standards, from vehicle inspection and driver licensing to insurance that protects passengers and others who could be hurt in an accident.
Transportation Network Companies (TNCs) such as Uber or Lyft are not subject to the same requirements. However, they have drawn increasing attention from state regulators and legislators concerned that the public may not be properly protected. In fact, various state regulators have issued consumer alerts to warn the public about possible risks of using a ridesharing app when riding as a passenger.
How is the ridesharing company insured?
Insurance is the crux of the issue. Drivers are using their personal vehicles. Personal auto insurance generally excludes coverage when transporting passengers for a fee.
An increasing number of TNCs are indicating that they are going to provide some protection by covering the driver’s commercial exposure for liability and collision coverage. The nature and scope of coverage provided by the TNC varies from company to company, and its coordination with the driver’s personal auto policy can leave uninsured gaps, in some cases significant.
How do I know if I’m covered as a passenger?
If you are considering using a ridesharing service, you should:
- Research the companies that operate in your city
- Find out how these companies protect their drivers and passengers, including their liability limits
If you have a personal auto policy yourself, you may be able to claim some coverage under your policy if you are hurt in an accident as a passenger. If you do not own a car, you will not have that option, unless you purchased a “named non-owner” policy. Your agent can advise you about coverages.
Why should I worry? How likely is it that a bad claim will occur?
There is no way of knowing what kind of accident will occur. Hopefully, none. However, many of the insurance issues that have come to light have stemmed from catastrophic claims: one in California in which a six-year-old girl was killed in a collision with a rideshare car.
While often downplayed by those who have an interest in the ridesharing business, coordination between the commercial and personal auto policies can pose challenges. The timing and circumstances of any accident will have a bearing on whether coverage extends to the driver and the passenger. At this time, coverage gaps still exist in a number of circumstances.
Is this insurance issue settled?
No. Between challenges from Public Utility Commissions, restrictions on licenses to operate, and the Legislature contemplating new laws to address proper insurance coverage, among other things, the issue is not settled. While we do not provide any optional coverage specific to this use, we will continue to follow the personal auto industry’s response to closing these coverage gaps.
Used with permission from Insurance Agents & Brokers © 2015
