The Rideshare Insurance Gap
You are likely already aware that technology is changing the way we live on a daily basis. Rideshare apps are pushing the traditional cab driver out of the market. They are also creating a potentially risky gap in insurance coverage for their drivers.
Here’s the story: I’m sitting in my car with the Uber app turned on and waiting for a rider to request a ride. I decide to move to a better area in the shade but accidentally pull out in front of a van with 5 school kids. Several kids are injured and the van and my car are both heavily damaged. Do I file a claim on my personal policy or on Uber’s commercial policy? What will be covered?
The disclaimer here is that if you drive for a ridesharing company, you need to check what their insurance covers, and especially when that insurance is triggered. Ridesharing establishes commercial use of your vehicle and therefore invalidates your personal auto insurance policy. Similar to using your vehicle to deliver pizza, if you are in an accident while the app is on, you do not have coverage on your personal policy. Some companies are adding an optional coverage for this but even the option is quite limited. The only way to be sure that you have the coverage you need is to talk to an agent about a commercial insurance policy.
The best way to break this down and understand the potential gap is to look at the four stages of using an app.
1st Stage – The app is turned off. There is no impact and your personal insurance coverage takes care of you as always.
2nd Stage – The app is on and you are trolling for a rider, or sitting and waiting for a rider. In this stage, the vehicle is available for a ride and this is commercial use, your personal insurance is invalidated. Some ridesharing companies will provide limited coverage in this stage but the liability limits are usually low, the deductible for damage to your car are high and there may be a cap to the physical damage payable on your car. I’ve seen limits as low as $15K. If you are driving a car worth more than their limit, you won’t have enough coverage.
3rd Stage – A potential customer requests a ride and you drive to pick them up. In this stage, your personal insurance is still invalidated but the ridesharing company insurance should kick up to their higher limits. The physical damage coverage might not change so there may still be an issue with getting a fair value for your car.
4th Stage – You pick up a rider and take them to a destination. This is similar to stage three.
If you are able to obtain a copy of the rideshare insurance policy, you want to see what the limits of coverage are in each of these stages. Be sure to pay attention to how injuries are covered, damage to your vehicle, deductibles and limits. Make sure you ask about Medical Payments and Uninsured Motorist protection too.
Some insurance carriers are adding endorsements to their personal policies that you can add to your coverage. Even with these endorsements, don’t think that you are “fully covered” unless you have a conversation with an agent.
So what is the answer to the question we started with? If you have an endorsement for this stage 2 coverage, you may have some coverage in both places. If you don’t, you will have some (very) limited coverage from the rideshare company insurance.
We have a ridesharing coverage available from Travelers Insurance and from Progressive Insurance.
Some other good articles on this subject:
A coverage dispute between Uber, Lyft, and insurers leaves drivers exposed