The new sharing economy is bringing innovative new ways to do business to our communities. Ridesharing, or using your personal vehicle as a livery or taxi cab, has become one of the most well-known sharing economy cottage industries. Using your personal vehicle to earn extra income is a very tempting opportunity and you may have seen Uber recently advertising to Maine drivers. However, there are important insurance factors to consider before you pick up your first passenger. Let’s review what a typical personal auto insurance policy covers, what rideshare company auto insurance covers, and the remaining gaps that could leave you vulnerable in case of an accident.
Personal Auto Insurance
A personal auto insurance policy is exactly what it states; personal. It is crafted to provide you with coverage if an accident occurs while you are using your vehicle for personal use. It is helpful to think of the word personal as meaning noncommercial in this instance. Imagine, you are driving to the grocery store and you rear-end the car in front of you. Since you were using your car for noncommercial use, the collision coverage of your personal auto insurance policy will come into play and you typically will not have to pay out-of-pocket for any damages once your deductible is met.
Now imagine, the rear-end collision occurred while you were on your way to pick up a rideshare passenger. Since you were using your vehicle for a commercial purpose, your personal auto insurance provider may, and most likely will, deny your claim. This means you could be responsible for paying up to 100% of any damages to your car, damages to other cars involved, damages to other property, and medical bills. Your insurance carrier may be displeased to learn that you’ve been using your car for commercial use without their knowledge and may choose to cancel your policy altogether.
In the event of an accident, you may think a simpler solution is to not tell the police officer you were on your way to pick up a rideshare passenger. Think again; that’s insurance fraud!
Rideshare Company Insurance
Rideshare companies offer insurance policies they claim will cover their drivers in the event of an accident. However, your personal auto insurance provider still needs to know how you are using your vehicle, regardless of what other policies may be in place.
Let’s use Uber as an example. If you drive with Uber, you can choose to use their commercial insurance policy, which covers drivers in the event of an accident when a passenger has asked to be picked up, while en route to pick up a passenger, or when a passenger is in a driver’s vehicle. If you have an accident after your passenger exits your car and before your next passenger contacts you, you may not be covered by Uber’s policy.
What can you do?
At this point, the situation may seem hopeless for current, and would-be, rideshare drivers. This is not the case. As this new industry develops, insurance companies will catch up with new policies that cater to rideshare drivers. Presently, there are commercial auto insurance policies that United Insurance could craft for your needs. If you would like to join the ridesharing community as a driver, give us a call to talk about what your options are and make sure you are covered.
This article is meant to talk generally about insurances as it relates to ridesharing. Specific insurance carriers and/or state laws may interpret coverage differently.