The concept of commercial ride-sharing has exploded in recent years. Companies like Uber and Lyft provide smartphone apps that allow folks in need of a ride to ask and receive. Drivers respond and accept payment to pick riders up and take them where they need to go. Everyone's a winner, but what happens if an accident occurs en route to picking up the customer or while taking him or her to the destination? It depends on the driver's insurance, as well as that of the ride-sharing company.
Don't rely solely on your personal policy
Reach out to your insurance company if you decide to earn some extra money driving for a ride-share company. Some insurers now offer special policies to accommodate drivers. For example, Geico offers a "hybrid" policy that covers both your personal use of the vehicle and ride-share use. It replaces your existing personal policy. These policies can vary by state and by insurer, so you may have to change to a new company to get the coverage you need.
Some companies impose mileage limits, which could be an ideal solution if you're not using ride-sharing as your full-time job. Otherwise, you may need a commercial auto policy, but make sure it also covers personal use of your vehicle.
Don't rely on your personal insurance without first making sure it covers driving for hire. Your policy most likely will not cover you in the event of an accident if happens under circumstances where you've accepted money to transport someone.
Transportation network companies may have their own policies
Ride-share companies, sometimes called transportation network companies or TNCs, may have their own insurance policies that cover drivers as well. Of the three major companies, Uber has taken the most aggressive initiative to assist its drivers, but there may be coverage gaps that leave you vulnerable.
Ride-shares are typically broken down into three segments: (1) when you're cruising around, waiting for a ride request, (2) when you're on your way to pick up a passenger who's requested a ride, and (3) when you're actually transporting that passenger. The company's coverage may depend on the phase you're in at the time an accident occurs. Uber's insurance covers you when you're actually on a trip but not in phase one, and this is common. Some companies' insurers even exclude claims that arise in the second phase, so if you have an accident while you're driving to pick up a passenger you could find that your personal insurance won't cover you if you haven't adjusted your personal coverage.
The TNC's insurer may require that you first make a claim to your own insurer before resorting to them. This is not the case with Uber - at least for personal injury and liability claims - but property damage claims must still be made to your own insurer.
- Geico: Ridesharing Insurance FAQs for Rideshare Drivers
- Allstate: I Drive for a Ride-Sharing Company. Am I Covered?
- Uber: Every Trip Is Insured
- Bankrate: My son wants to drive for a rideshare company. Will we need more car insurance?
- National Association of Insurance Commissioners: Commercial Ride-Sharing