The question of coverage or who covers an accident in the event that one happens while driving for Uber or Lyft, is tricky.
While Uber and other “ride sharing” companies do not identify as taxis but rather a marketplaces where a driver offers services and users can get a ride. Insurance companies may not see it this way. Further more state governments are trying to decide how they view it as well and regulations will have to be looked at by state for insurance requirements and regulations. Keep in mind too that Uber and Lyft are still relatively young companies and their policies and procedures are still evolving as far as supplemental insurance that they provide.
How does car insurance work for Uber and Lyft drivers?
Despite the Lyft website describing their drivers as “a friend with a car”, auto insurance companies view them as commercial drivers. Ride Sharing companies have insurance policies(which have recently changed, so you may want to review) the companies describe the coverage as applying while the app is on. This refers to while you are transporting a passenger in your vehicle. The rest they say is covered by your personal auto policy.
But what about the “gap” where you are driving with the app on to pick up a passenger? That is the controversial gap or potential coverage gap that has sparked these articles and make it worth while for the driver to investigate if they are covered during this period.
So you are driving to pick up an Uber customer, yours and another vehicle collide and have a collision at an intersection on your way to pick up the customer. There are damages to the vehicles and a passenger of the other vehicle is claiming minor injuries. You are the at fault driver. Who pays? You do not have a passenger in the car, so Uber would not pay. You have a personal auto insurance policy, but they consider “driving for pay” for be business use. Your policy does not specify business use nor it is a commercial policy. That is the question. this could be a possible coverage denial. Your insurance company may pay for this this but chances are they will cancel the policy at renewal.
Given a recent event in California where an Uber driver struck a minivan causing the fatality of a child, California now require Transportation Network Companies(TNC) to provide coverage up to certain limits for driver and vehicle from the moment the driver turns on their app. However, this is only one state and other states TNC’s have no such obligation.
So how do drivers protect themselves?
- Contact your insurance agent or current provider to see how they handle claims turned in my TNC drivers and if coverage is provided.
- Commercial Auto Insurance Policies can be purchased. But for part time drivers this may not be economical.
- You might also check to see if there are local or state regulations in place for TNC drivers that require the TNC company to provide insurance. If that is case contact the company and have them send you proof of insurance to carry.
- In the mean time you could push your state representative to create legislation to regulate TNC’s to provide coverage while driving for them. You could also let your insurance company know that you are in support of a hybrid personal/business commercial policy to be available for this driving scenario. There has been talk of this type of policy but it is yet to be seen and it is not known that the cost associated would be.