Industry Issues | Transportation Network Companies

Five Things Every Rideshare Driver Should Know Before Signing Up 

RideShareIt may have been a rainy night in Georgia, but at the moment you’re driving solo through the rainy streets of your town. You’ve got a few errands to run and a radio ad from a rideshare firm comes on talking about turning your vehicle into a “money making machine.” Now they have your attention and as the wheels of your vehicle turn, so do the ones in your head.

While you love your car, it’s costing you money. Gas prices have come down, but maintenance and your car note have not and in this economy who couldn’t use a few extra bucks. You see some people clumped together under a single umbrella looking like they wish they could get from point A to B and stay dry. Then you think, those rideshare drivers are really raking it in right now with their demand surge pricing!

You start to wonder, what could go wrong with turning your car into a money making machine? Then your cell phone rings and you look down to see who’s calling. The next thing you know there is a loud bang and jolt and you’ve rear-ended the driver in front of you.

If you were that rideshare driver and had your app on, this “money making proposition” may end up costing you a lot more than you think.

So, what could go wrong…beyond the obvious things that come with picking up random strangers, there are a host of issues that arise if you were in an accident.

  1. An insurance coverage gap exists for rideshare drivers and you may not have crucial insurance coverage to protect you, your vehicle and the public if you're involved in an accident!
    The rideshare firms may not tell you this, but just about every standard auto insurance policy contains wording that excludes coverage if you’re using the vehicle like it is a taxi and carrying passengers for hire. While the transportation network companies, like Uber and Lyft, say they have insurance, it is not always clear when their coverage is activated, which could leave drivers uninsured while they are on the road. The potential for coverage gaps put everyone at risk.

  2. What kind of risks would a driver be exposed to?
    If you don’t have the appropriate insurance you could end up paying for repairs to your vehicle and all other damages associated with an accident if it is your fault. Additionally, if you’re hit by an uninsured driver, you may stuck paying for the repair. There may not be uninsured (UM)/underinsured (UIM) motorist coverage, medical payments coverage, comprehensive, collision or other optional coverages.

  3. You could be involved in a battle and litigation over who pays for the damage.
    Because the transportation network company coverage is not primary and your personal auto insurance does not provide coverage, it is not clear who pays for accidents. That means delays in compensating the victims, extra costs incurred with handling claims and the potential for litigation, costs that could wind up being reflected in the premiums of every driver in the state.

  4. There are not clear guidelines to ensure that vehicles used in these ridesharing programs are properly insured.
    To close the insurance gaps and ensure drivers, passengers and the public are protected, transportation network companies and/or their drivers should carry primary coverage that specifically covers ridesharing activity and it should apply exclusively at all times while a driver is signed up for a ride sharing program. This approach establishes a bright line regarding coverage and reduces the opportunity for disputes.

  5. There are reports that rideshare drivers are encouraged to lie about how they use their vehicles.
    There have been news reports that highlight the difficult position that rideshare drivers have been forced into because transportation network companies don’t provide the appropriate insurance coverage to protect their drivers and the public at all times. To avoid unexpected disputes, rideshare drivers should talk with their insurer about how they plan to use their vehicle to ensure they are protected if an accident occurs. Driving a car as a livery presents higher risk than normal personal use of a car. Insurance coverage needs to specifically apply to these activities.

The caution signs are out there
Did you know that more than 20 state government agencies that oversee insurance issues and the National Association of Insurance Commissioners have issued public advisories to let drivers, passengers and the public know there are gaps in the transportation network companies’ insurance coverage. Without greater clarity regarding what insurance coverage is being provided and when, there is uncertainty whether there is proper coverage for injuries or damage arising out of an accident.

While many people welcome the new transportation choices in the marketplace, consumer safety is of utmost concern. The most appropriate course of action for the protection of drivers, passengers and the public is for state and local policymakers to address the various insurance issues.

Learn more about these issues at the Property Casualty Insurers Association of America website.


Supporting Innovation:
Closing the Insurance Gap



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