Ridesharing and Insurance
A concept that has greatly helped our ever-evolving society is the concept of ridesharing.
For those of you who haven’t been exposed to it, ridesharing is essentially a taxi service through an app on your smartphone.
Anyone who would like to make a few extra dollars and has access to a car can apply to be a driver. It has become extremely popular, especially among Millennials, to get from point A to point B.
Sounds like a win-win all around right? Drivers make money, passengers don’t have to worry about driving/parking. What you may not have thought about is how insurance works with ridesharing.
Before we get started
There are different stages of ridesharing that are common among both Uber and Lyft:
- Stage 0: Uber/Lyft app is off.
- Stage 1: Uber/Lyft app is on, but you have not accepted a pickup yet.
- Stage 2: You have accepted a pickup and are en route to pick up the passenger.
- Stage 3: You have picked up the passenger and are driving them to their destination.
Each stage determines what insurance coverage you have at that moment.
During Stage 0, this is normal driving. You are not driving for Uber/Lyft and your personal insurance policy covers you.
In Stage 1, your personal auto policy NO LONGER COVERS YOU. Uber/Lyft’s policy kicks in during this time, however, during this stage the coverage is very limited. Your liability limits are very low, there is no uninsured/underinsured motorist coverage, and no physical damage coverage.
Having low liability limits could put you at risk in a serious accident where you are at fault. No uninsured or underinsured motorist coverage puts you at serious risk if you’re in an accident with someone with no or not enough insurance.
And lastly, if there is any damage to your car during this stage (accident, deer hit, windshield damage, etc) YOU HAVE NO COVERAGE. You will have to pay the full amount out of pocket.
Stages 2 & 3
During Stage 2 and Stage 3, Uber/Lyft’s policy fully kicks in. You have much higher limits for liability and uninsured/underinsured motorist, so you no longer have to worry about that. You do have physical damage coverage, however, the deductibles (what you pay out of pocket) are quite high.
For Uber, if you have damage to your vehicle and it falls under comprehensive or collision coverage, you must pay $1,000 out of pocket before Uber’s insurance covers the remainder.
For Lyft, if you have covered damage, you must pay $2,500 out of pocket before Lyft covers the remainder. Depending on the amount of damage, you may still have to pay the full amount out of pocket!
If this information shocks you, it is time to have a conversation with your insurance agent. As CRG agents, we have carriers who offer endorsements to counteract this limited coverage.
The endorsement needed for all Uber/Lyft drivers goes by different names, however, the coverage it provides is the same. Adding what is sometimes called the “Transportation Network Coverage”, extends your personal auto policy through Stage 1 of ridesharing.
This means you have your same personal auto insurance coverage until you accept a pickup. Adding this coverage greatly reduces your exposure in a serious accident, and prevents paying massive amounts out of pocket during an accident.
How we help
To avoid any situation where you are left with limited insurance, always be transparent with your CRG agent. Keeping us informed at all times, is extremely beneficial because we can tweak your policies to best suit your unique situation.
Doing this may cost a few extra dollars each year, but prevents large amounts out of pocket for reasons that could have been avoided. So keep us in the loop, and we’ll keep you fully protected.
If you know of someone who could benefit from the services of a CRG agent, forward this to them!
If there is a specific topic or insurance-related question you would like discussed/answered in a future newsletter, please reply to this email with your inquiry!
Disclaimer: If you are an Uber/Lyft driver, be sure you tell your insurance agent. The following information you may not have known, and you may be at a much greater risk than you thought. Your personal auto policy excludes commercial use of your vehicle.