Ridesharing services, such as Uber and Lyft, have drawn a lot of attention these days. At first, what seemed like a harmless, easy way to make some extra cash now seems fraught with extra concerns. So, before you sign up to be a driver, consider the insurance risks of driving for hire.
You should know right off the bat that driving for hire has been a long-standing exclusion under personal auto insurance. Until now, it never received much attention. Recently, federal and state statutes clarified personal auto insurance law. It starts with the “periods” of ridesharing activities.
Period 1: a driver or policyholder is logged into a rideshare app but not yet matched with a passenger.
Period 2: the driver has matched with a passenger and heads off to pick them up.
Period 3: the passenger is inside a policyholder’s vehicle.
Period 1 creates a gap for the ride-sharing driver. You see, depending on which service you’re engaged with (Uber, Lyft, etc), you may have contingent liability at lower limits that your personal auto insurance. What does this mean? The ridesharing company’s insurance only kicks in once your primary insurance has denied coverage. A hassle, at minimum; a potential gap at its worst.
What do you do? First make a call to us to talk specifically about your policy. Some carriers are coming out with endorsements to cover this Period 1 gap. If you love being a ride-sharing driver, make sure you are insured during all phases of ridesharing. If you’re not yet a driver, but just considering it, take a hard look at the dollars and cents of this deal. Call us to talk about your policy and the costs of any available endorsements.
Now, while in Periods 2 and 3, your ridesharing company should offer insurance. Buyer beware, though! Coverage is still contingent with most ride-sharing companies, and deductibles are much higher! Lyft’s deductible is $2500. That’s $2500 you have to pay first before any insurance kicks in! Be sure you understand how that insurance would respond and what out-of-pocket costs you may have.
Then there’s the risk of having your personal insurance non-renewed because of the driving for hire exposure. Again, this is a long-standing exclusion on most personal auto policies. Some carriers are developing endorsements for ride-sharing clients, and the marketplace is changing rapidly.
Bottom line is… figure your bottom line! After looking at the exposures and potential additional costs, how much are you really earning? Also remember that ride sharing companies are in it to make money, not take care of you. Read the fine print and understand your risks. Finally, call us for counsel! We can give you specific answers, based upon your policy!