It goes without saying, having enough auto insurance is important. But, if you’re a rideshare driver for a TNC (Transportation Network Company), such as Uber or Lyft, you should be especially aware of the risks and how insurance works.
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There are many states where there isn’t an officially recognized rideshare insurance policy and although you may still be covered by Uber/Lyft, your personal insurer may drop you for being a rideshare driver.
I’ve researched this issue extensively and here’s what it boils down to:
Insurance coverage provided by a Uber and Lyft depends on which of these three distinct periods of driving you are in when an accident occurs:
• Period 1: Your phone app is open and you are waiting for a match.
• Period 2: You have accepted a match and are on your way to pick up the passenger.
• Period 3: The passenger is in your car and you are on your way to the passenger’s destination.
Uber and Lyft, for the most part, have adequate insurance coverage for Periods 2 and 3. Both offer a $1,000,000 primary commercial liability and UM/UIM policy during these periods. Since It’s clear that at this stage, you are using your vehicle for commercial purposes.
However, they do not provide adequate insurance coverage for Period 1. This is where the insurance gap occurs due to the lack of collision coverage available to you as a driver.
So, do you need a rideshare insurance policy?
This is a personal decision that you need to make for yourself. In order to make this decision, you need to understand the additional risks you are taking by not having a rideshare insurance policy.
No coverage or reduced coverage – Many auto insurance policies, under a clause known as the livery exception, generally exclude you from coverage if you are using your vehicle to transport passengers for a fee. In California, there are approximately 100 auto insurance companies. Each one has different language relevant to the livery exception. Here’s an example of typical exclusion below (your exclusion may be different. you should read your policy).
We do not provide coverage … arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This exclusion does not apply to a share-the-expense car pool.
Dropped – If your insurance company discovers that you’re driving as an Uber or Lyft driver, there is a good chance that you will be dropped from their coverage entirely.
Higher insurance rates – If you do get dropped, there is an even better chance that you will pay more for your insurance. Insurance companies rate drivers that have been dropped as higher risk and your new premium will reflect this.
Solutions for California Rideshare Drivers.
In rideshare’s largest state, there are actually only a couple options for drivers:
Period 1 Coverage / Rideshare Insurance Policies – as of October 15, 2015, MetLife Auto & Home’s product is the first to offer a personal auto policy designed for Lyft drivers that provides coverage for drivers at every period of the ridesharing transaction (Click Here To Get a Quote) along with several other carriers beginning to offer policies to Uber and Lyft drivers in California.
This is great news since you no longer need to worry about being dropped by your insurance company if you insure with a rideshare-friendly insurance company.
But changing insurance may not be a simple matter since you may have policies across your homes, other cars, etc. However, I know how to keep it simple with my clients. So, that’s why as Your Personal Independent Insurance Agent who offers Rideshare Insurance I recommend comparing the cost by requesting a free quote.
There are over 70,000 rideshare drivers in rideshare’s largest state but over 80% of you haven’t told your insurance company about your status as a rideshare driver. If it’s reasonable in price to add coverage to your personal auto policy, As a business owner I think it’s the responsible thing for you to do.
Commercial coverage – All drivers have the ability to obtain a standard commercial policy but the cost is often at least $500-$600/month. BUT there are other commercial-like policies available. I offer policies that cover the rideshare driver during ALL rideshare periods. Uber and Lyft also provide primary insurance during periods 2 and 3, so with this type of commercial-like policy, the driver essentially has double coverage. This duplicate coverage provides the greatest peace-of-mind since you can make a claim with Lyft/Uber or your own insurer (if they have a lower collision deductible for example). Remember, Uber has a $1,000 collision deductible during periods 2/3 and Lyft’s collision deductible is $2,500 during periods 2/3.
Decisions
Every rideshare driver needs to make a few decisions:
Comply with the law – Will you as a driver just risk getting caught with insurance that doesn’t meet the guidelines of your state for period 1 or will you obtain new insurance that complies? This is a personal decision that every driver needs to make for themselves.
Accident during period 1 – How will you handle an accident while online but without a request? Technically, if you have a policy that does not cover for rideshare driving or for period 1, you will need to use Uber or Lyft’s contingent coverage, but you may need to file a claim with your insurance company first.
So if you’re driving around without a rideshare friendly policy, it can be a confusing process. But drivers aren’t the only ones that are confused about what options are available. I have run into agents that don’t understand how rideshare insurance works. If you feel like this could be you, or you feel like I should just review it, sit down and take 5 minutes to go over this. Then let’s talk and let’s not delay. Feel free to call / text me directly (760) 803-1561 or message me at freddie.servininsurance@gmail.com or start your own quote process here.
This is the blog of Freddie Servin 