Rideshare Insurance 101: Is your coverage enough?

insurance101

Recently SherpaShare asked its readers about their insurance coverage and discovered that a vast majority of people were, in fact, not covered adequately for incidents that occurred as the result of ridesharing. 

Do I need Rideshare Insurance?

The short answer is, probably yes! Most places/states have not yet caught up to the expanding world of rideshare and insurance coverage explanations remain muddled at best.

Colorado, California and Texas have all passed specific bills to cover ridesharing insurance needs. This trend is sure to catch momentum as more and more bills are tabled in the face of a rapidly expanding rideshare economy. In most other states, it isn’t exactly clear whether you need a ‘Commercial’ insurance policy to drive. In some cases these policies are required; for example, all drivers who wish to pick up in NYC must obtain a TLC license. So what are the downsides to not having a specific rideshare policy and how might it affect you?

The biggest downside to not having a ridesharing policy, or not letting your current provider know that you drive for Uber, is that if your insurance company finds out after the accident, there is a chance they cancel your policy and refuse to fill your claim and insure you thereafter.

What does your personal policy NOT cover?

Quite simply, your personal policy does not cover you or your car in any way once you turn on that Uber App. Your car at that point stops being a personal vehicle and is now no longer covered by your personal policy to the minute the passenger exits the car and the App is turned off. Since TNC (Transportation Network Company or basically rideshare company) drivers use their personal cars to give rides, they almost never have livery licenses that Limo/Cab companies have required their drivers to get. So what is the difference?

According to the Insurance Information Institute

Insurers and insurance regulators are concerned about misconceptions regarding the use of personal auto policies by TNC drivers. Personal auto insurance policies are not designed, underwritten or priced for commercial ride-sharing; indeed, they typically exclude “livery services.” The assumption is that private-passenger motorists drive themselves, family members and friends, and have an average annual travel of 12,000 miles–and, of course, that no money is earned from these private trips.

Like conventional taxicab companies, TNCs are commercial enterprises. Therefore, in order to have coverage, TNC drivers need commercial insurance coverages–just like taxi and livery car drivers. Commercial auto insurance policies generally carry higher liability limits. They are also underwritten with the recognition that commercial vehicles travel more miles than private-passenger cars, and that the passengers in a TNC vehicle are customers, rather than friends or family members.

Can I just tell my insurance company I also drive for Uber?

Yes! Yes you can! The reason most people choose not to do this or are worried is that there will be a change in policy and most people do not want to deal with that. There was a legitimate fear earlier that you would be unable to obtain insurance if you let on that you drove for either Uber or Lyft. However as rideshare becomes more ubiquitous, more and more insurance companies are cognizant of the changing landscape and offer products to match.

There are many reasons for why your personal insurance carrier might drop you/increase your premium if you fail to disclose your ridesharing activity and then have an accident. According to a paper written by the NAIC, there are a few reasons for this. From a personal auto insurers perspective

this activity may translate into increased risk of loss due to:

  • additional miles driven
  • heightened geographic hazard caused because TNC drivers typically find matches in urban, high-traffic locations
  • unfamiliar roads
  • driver distraction caused by TNC apps
  • more people in the car that can be injured
  • the additional risk caused as drivers rush to accept matches and pick up and deliver passengers in a timely manner.

Furthermore there is a clear formula that most Insurance companies follow when faced with hitting an uninsured driver

Medical payment coverage applies regardless of fault and covers bodily injury to the named insured as well as family members and any passengers in the auto at the time of the accident. Personal injury protection provides coverage for basic expenses such as medical costs that an insured and his or her family may incur in a no-fault state. Roughly one-fourth of states in the U.S. have a form of no-fault automobile laws, meaning they allow auto accident victims to collect benefits from their own insurers regardless of who was negligent.

Uninsured motorist coverage provides compensation to the insured and their family members when an uninsured driver causes losses. Underinsured motorist coverage pays the insured or their family members when a driver causes losses that exceed the negligent driver’s policy limits.

This last part is important as it greatly increases the risk you face if you collide with an uninsured driver without a passenger in the car and the app turned on! Have you told your company that you are also driving for Uber?

What does the Uber and Lyft insurance policy cover?

California is worth a special mention because ride-sharing has grown exponentially in cities such as Los Angeles and San Francisco. In September 2014, Governor Jerry Brown signed into law Assembly Bill 2293, which made insurance coverage compulsary for all vehicles from the minute they turned on their ridesharing app.

This was one of the main reasons Uber and Lyft started their own insurance coverage in order to stop this being a hindrance for new drivers to sign up. They never meant for it to be a comprehensive measure to solve all driver insurance gaps. Therefore, it is important to note that this insurance is not perfect and does not cover you in all circumstances. This is merely meant as contingency insurance in case the other driver has NO insurance! This is extremely important to realise. 

Lets take a look at when you are not covered at all by your personal policy.

There are three distinct periods where a personal auto policy offers no coverage to TNC drivers, according to a National Association of Insurance Commissioners (NAIC) March 2015 white paper.

  • Period 1: when the TNC driver logs into the TNC application but is not matched with a passenger
  • Period 2: when the TNC driver has made, and accepted, a match with a prospective passenger but that passenger is not yet physically in the vehicle
  • Period 3: when the TNC driver has picked up the passenger and the passenger is occupying the TNC driver’s vehicle.

Here is the coverage offered by Lyft and Uber

uber_insurance-graphics_700x560_r10_General-Insurance-Graphic
Credit:Uber
download
Credit: Lyft

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Notice there is no collision coverage in Period 1…and it is a contingency insurance!

Even if you do have a passenger in your car and the TNC’s collision insurance kicks in, there are deductibles.

insurance 1013.png

What happens if I get hit during Period 1??

This is important! This is where the gap in your policy can hurt you. Uber and Lyft both have contingent insurance policies in place for the event that you do not have primary auto-insurance. However, if you do have your own insurance policy, you are obliged to contact your insurance company first.

As we have said earlier, we highly recommend getting rideshare insurance or atleast considering all eventualities before filing a claim. Here are the options you have.

  1. Contact your insurance company and file a claim without mentioning that you are a rideshare driver. This is fraudulent and we do not condone this!
  2. Contact your insurance company and let them know you were waiting for a passenger. At this point, it becomes a little hazy. Some insurance agents might let it slide and just cover your claim, but on the other hand you have just given your insurance company grounds to a) raise your premium b) end your coverage and turn you into a high risk client for the next insurer or worst c) deny your claim and end your coverage!
  3. Have no insurance policy in place and be covered by Uber’s contingency. This too, is not recommended –  what happens if someone hits your car in the driveway?

This limited liability coverage in Period 1 is what some insurance companies are now trying to combat/cover by offering Hybrid Rideshare Insurance!

Wait… what about damage to my car?

Spot on! There is NO COLLISION Coverage!! That means you are responsible for all the damage to your car; you can try and claim it from your insurance company, but risk them denying your claim and dropping you from the policy. This is the huge risk you face when you are in Period 1. Given that you are in Period 1 for a significant period of time, it only makes sense that you explore the insurance landscape to get better protected!

What is Hybrid Rideshare Insurance?

According to Geico

Ridesharing Insurance policy is a hybrid policy and will replace your existing personal auto policy. So not only do you have coverage for personal use, you have the added level of protection for ridesharing; all for a competitive price. Once you purchase our policy, you no longer need your personal auto policy. If you have multiple vehicles, you will need to continue personal auto insurance on the vehicles not used for ridesharing.

Other insurance providers are also moving into this space and we have a list of all the major players in the market along with the states they cover! However even here not all insurance coverage is the same. Farmers for example only covers you for Period 1 and requires you to use Lyft or Uber’s coverage for Periods 2 and 3. This brings the deductible into play!

rideshare-chart.png
Credit: Farmers

What does it cost?

The average cost INCREASE across most insurers over your standard personal policy seems to range between $50-$200 a year. This is over your current Personal Auto Policy. Check out our table below to see what products are available to you in your state!

Continous Coverage vs Personal Coverage Extension

Not all rideshare insurance policies give you the same coverage. There are two main types of insurance policies that can help you cover this gap in your policy.

  • Continuous Coverage: This is the sort that Geico offers and it covers you from start to end, regardless of whether you are driving for business or pleasure.
  • Additional Coverage: On the the other hand, Farmers for eg. will only extend you coverage for Period 1. This means that the minute you have a passenger in your car, Uber/Lyft are in fact primarily responsible for all claim resolutions and when the app is off, your personal auto policy kicks in.

 

Coverage by Provider

Geico

States Covered: AZ, CO, CT, D.C., GA, IL, IN,IA, LA, MD, MS, NE, NM, OH, OK, OR, PA, RI, SC, SD, TX, VT, VA, WV, and WY.

Rideshare companies covered: All

Policy Type: Continuous

Erie

States Covered: DC, IL, IN, KY, MD, OH, PA, TN, VA, WV, WI

Rideshare companies covered: All

Policy Type: Continuous (In fact Erie has just lifted restrictions on who qualifies as a business owner. This is great to know since they haven’t created a new category of insurance)

Farmers

States Covered: AZ, AR, CA, CO, KS, MN, NV, OH, OK, TX, UT, WI

Rideshare companies covered: All

Policy Type: Additional

USAA

States Covered: CO, IL, TX, WA

Rideshare companies covered: All

Policy Type: Additional

StateFarm

States Covered: CA, CO

Rideshare companies covered: All

Policy Type: Additional

MetLife

States Covered: CA, CO, IL, TX, WA

Rideshare companies covered: Lyft only

Policy Type: Continuous

MetroMile

States Covered: CA, IL, WA

Rideshare companies covered: Uber only

Policy Type: Additional

Progressive

States Covered: PA

Rideshare companies covered: Lyft only

Policy Type: Continuous

AllState

States Covered: CA, CO, TX

Rideshare companies covered: All

Policy Type: Additional

Coverage by State

Arizona: Geico, Farmers, USAA

Arkansas: Farmers

California: Farmers, USAA, StateFarm, MetLife, MetroMile

Colorado: Geico, Farmers, USAA, StateFarm, MetLife, AllState

Connecticut: Geico

D.C: Geico, Erie

Georgia: Geico

Illinois: Geico, Erie, USAA, MetLife, MetroMile, AllState

Indiana: Geico, Erie

Iowa: Geico

Kansas: Farmers

Kentucky: Erie

Louisiana: Geico

Maryland: Geico, Erie

Maine: USAA

Minnesota: Farmers

Mississippi: Geico

Nebraska: Geico

Nevada: Farmers

New Jersey: Farmers

New Mexico: Geico

Ohio: Geico, Erie, Farmers, USAA

Oklahoma: Geico, Farmers

Oregon: Geico

Pennsylvania: Geico, Erie, Progressive

Rhode Island: Geico

South Carolina: Geico

South Dakota: Geico

Tennessee: Erie

Texas: Geico, Farmers, USAA, MetLife, AllState

Utah: Farmers

Vermont: Geico

Virginia: Geico, Erie, AllState

Washington: USAA, MetLife, MetroMile

West Virginia: Geico, Erie

Wisconsin: Erie, Farmers

Wyoming: Geico


 

 

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