Uber Coverage: Ride Sharing and Auto Insurance

ride sharing, auto insuranceAre you a part of the transportation revolution? Ride sharing services like Uber and Lyft are changing the way people get from point A to point B, and they’re doing it well. However, this brings up an interesting conundrum: Uber and Lyft drivers aren’t commercially licensed, as these aren’t what you would consider a standard taxi or transport service, and that means they aren’t commercially insured either. That, of course, is where the problems come in.

Private auto insurance isn’t designed to cover passengers being driven for pay, that’s what makes it private. However, commercial insurance tends to be significantly more expensive and often requires a commercial license; according to BuzzFeed, this has led Uber to urging drivers to stick with personal insurance to save costs. The company insists that personal insurance is fully and completely sufficient for their drivers’ needs, but most insurance companies disagree—recently Geico was caught all but blacklisting ride-sharing drivers from their policies entirely. The report noted the company urging trainees to reject all policies of customers involved in Uber, Lyft, or any similar transportation businesses.

The biggest problem is that while Uber has commercial insurance that covers drivers after they’ve received a pickup request and headed off to get the passenger in question, this insurance doesn’t cover while the driver is waiting for an assignment—however, the fact that they’re using their vehicle for a commercial purpose even before heading off to pick up a fare means that their personal insurance is close to null and void. This, unfortunately, could leave drivers paying for repairs and medical care out of their own pockets. Luckily, SFGate reports that hybrid insurance policies are in the works with many more open-minded   insurance companies in order to bridge the gap, allowing a mix of commercial and personal that covers drivers during this waiting period at the beginning of a shift, referred to as “period 1” by the industry. Period 1 insurance would cover the driver personally during periods of time when he or she is working, but lacks a waiting or present fare.

If you’re interested in becoming a driver for one of these ride-sharing companies, the best thing you can do is be honest with your insurance company and find out what kind of coverage they offer within your budget. Personal coverage will only go so far, but with many companies aiming to offer additional coverage for this particular form of commercial use, the best thing you can do is keep apprised of their stance on ride-sharing. Your personal auto insurance won’t cover you 99 percent of the time if you’re looking into getting started with one of these businesses, and lying about your commercial status can result in some hefty fines.

Before you pick up your first fare, make sure you’re covered the right way. On the other hand, if you’re looking into utilizing one of these services, it may be best to wait until litigation and complications settle down a bit; once ride-sharing is here to stay, but it has yet to find its place in commercial transit coverage. Nonetheless, if you do the research and make sure everything is on the up and up, and you’ll be just fine.

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