What? Ridesharing? My car insurance would cover that…right??
You might be surprised to find out the answer. Ridesharing is becoming one of the fastest growing trends in our economy. An alternative to traditional taxi services, ridesharing companies like Uber, Lyft and Sidecar use smartphone apps to connect passengers with nearby drivers. But while ridesharing is becoming increasingly popular, there is quite a bit of confusion and controversy on personal auto insurance coverage for Uber, Lyft, Sidecar and other ridesharing programs. Have you read your policy lately or contacted your agent to see if you are covered driving for Uber, Lyft, Sidecar, etc?
According to the Future Advisor Blog, Uber and Lyft – the two largest ridesharing companies in the country – provided 1.4 million rides over a one-year period. With these kind of statistics and if you are thinking about being a passenger in the Uber car or being the actual driver for a rideshare car, you NEED to check out your Personal Auto Insurance Policy.
Many college students, unemployed or employed have decided to make some extra money and sign up to be an Uber, Lyft or other rideshare app driver. It is a great way to make some extra money. However, many of these drivers have not even thought about how their vehicle is covered under their own auto policy let alone under the rideshare companies policy. Many times, young adults do not think of the consequences that can happen to them if they are not covered by insurance and how this could ruin them financially for many years. Indiana and Illinois are garnishment states and can garnish your wages if you have a judgement against you that was not covered by insurance.
So let’s start with…
How EASY is it to become an Uber driver???
Let me tell you, I decided to check out Uber and see the process of becoming an Uber driver. To my amazement, it is simple and personally… I think scary.
I began the process of signing up for Uber by giving my name, address, date of birth, driver’s license number, and a picture of my insurance policy that just showed that my vehicle had insurance. Uber did not ask me my coverages or advise me to inform my insurance company or agent that I was going to be driving for Uber. Nor did they give me their insurance information. Then I got about 2 days of notices that they needed a copy of my vehicle registration. I was out of town, so I was not able to upload my registration…nor did I ever update my registration.
Uber sent me an email that they were working on a background check of myself. The next day, I received notice that Uber was not available in my city, but thank you anyways. On the next day, I was updated that I was just logged into a city known as NW Indiana. Still I have not sent them my vehicle registration. I then received approval to download the app and I could begin driving. I had yet to be informed my background check was approved until a few days later. I wonder if they even really ran a background check on me.
Every couple of days I get texts stating that I can get Uber swag and points and that I need to start driving. They still do not have my vehicle registration.
I wonder — what if I’m in an accident, what is their insurance policy?
I don’t know, I haven’t seen anything on insurance. I went to their site and could not easily find anything about accidents. I then did a search for accident and saw that if you are in an accident that I need to submit a form online…that is it…no number to call, no coverage information….scary….
While I am writing this blog, I then have a customer call us with a claim, because they have been in an accident and the caveat…they were driving for Uber and had no idea what to do. The customer never informed us (their agent) that they were driving for Uber…we had to inform them they were not covered, and the customer said they did not even know how to contact Uber to see if there is coverage under Uber. So I needed to do a little research for myself, the blog and my customer.
And yes… we are NOW 2 weeks later and they still do not have my vehicle registration…but — it is ok to drive for Uber???
Must be OK to drive, because I am getting daily texts from Uber to please start driving. Uber also signed me up and sent me a sticker to put on my car to drive in Chicago and pick-up and drop-off in Chicago…this makes me laugh…I did not request to sign up to drive in Chicago or do airport pick-up and drop-offs. I guess Uber wants me to drive to and from Chicago.
Why don’t they have their insurance policy and what is covered on their website? Why is it difficult to find?
I decided to log into my Uber app and searched “insurance” and found the following (which I took some screen shots). Then I found the terms and conditions which is what they provide to drive for Indiana. I never received anything for Illinois, but they mailed me stickers and information to drive to/from Chicago airports.
So basically in the app on the terms and conditions in #2 Required Notices — it tells you in the State of Indiana, your motor vehicle coverage may not cover you while driving for Uber. Why do they not make this more obvious and inform their drivers? I think this is pretty sad. At least, Uber does offer coverage while you have customers in the vehicle however, they do not make it easy to find; or easy to find where to file a claim.
I really don’t intend on driving for them, as I have some anxiety that it may not be that safe and I feel like it is picking up a hitchhiker. I personally do not want to pick up someone I do not know and drive them to their destination. However for those that do want to drive for a rideshare company, and do not have the fear of the unknown — like I have — it is very important to make sure you speak to your agent about your insurance coverage.
Am I an employee or an independent contractor???
Even though I am supposed to be an independent contractor for Uber, they feel the necessity to daily email or text me that if I don’t start picking up a passenger, they are going to terminate me as a driver. So I guess they feel I am more of an employee to them than not…but that can be a whole different blog regarding employee vs 1099 – independent contractor.
Now… let’s talk about ARE YOU COVERED ON YOUR OWN PERSONAL AUTO INSURANCE POLICY???…
How confusing is the insurance coverage?
There is such a lack of clarity around whom, if anyone, provides insurance coverage. Insurance varies among ridesharing services. Some companies provide liability coverage, which pays for damage a driver causes to other people or property — but not the driver. Some ridesharing companies may offer a small amount of “contingent coverage” for certain types of damage that kicks in if the claim is denied by the driver’s insurance company. Other companies may not provide coverage in what’s call “the gap”—meaning the time between when the app is on but before a driver is commissioned to pick up a passenger and more than likely if the app is “ON” YOUR PERSONAL AUTO POLICY WILL NOT COVER.
What about my Personal Auto Insurance?
The drivers are at risk of having to pay for damage or injuries to themselves and their property, out of their own pockets, since personal car insurance policies may not cover cars that are “For Hire”.
MOST personal auto insurance policies EXCLUDE driving for hire or using your car as a taxi. You may say… well I have Business Coverage use on my auto — however, most personal auto policies will allow “Business use” for delivering pizza or flowers but has historically excluded people who use the car like a taxi or drive-for-hire. Therefore, if you do not have the proper coverage endorsing driving for hire, then you will NOT be covered during a rideshare which includes, before during and after the hired ride.
If your auto insurance does not cover you while your vehicle is being used for ridesharing, then you would need to purchase commercial coverage to cover ridesharing, taxi service, etc. OR find a new company that offers it on their personal auto insurance.
Does any Auto Insurance Company offer Coverage for Ridesharing?
Yes, they do. Hoosier Insurance Agency in Schererville, IN offers personal auto insurance that covers ridesharing for our Indiana and Illinois customers through Erie Insurance. Erie Insurance offers a unique coverage to protect drivers who use ridesharing services like Uber and Lyft. According to Erie, “The new car insurance coverage solves a longstanding problem for drivers in the ridesharing economy by eliminating confusion over what’s covered and when. With ERIE’s new coverage, the driver has insurance coverage during every part of the trip—before, during and after the hired ride.”
According to an Erie Insurance press release in 2014, “The new Erie Insurance coverage is available to people who put a “business use” designation on their personal car insurance policy.
“‘Business use'” traditionally has covered people who use their personal cars for things like delivering pizza or flowers, but has historically excluded—meaning not covered— people who use their cars as taxis,” said Cook. “We are removing that exclusion, so now if you use your car for a ridesharing service like Uber or Lyft, there’s no confusion over what’s covered and when. You’re covered during every part of the trip—before, during and after the hired ride. We know of no other insurance company that is offering something like this.”
Coverage is subject to limitations and exclusions. See the policy or an ERIE Agent for details. – See more at: https://www.erieinsurance.com/about-us/newsroom/press-releases/2014/ridesharing#sthash.HxgtOMgr.mnSYAbFH.dpuf”
Take a look at Erie Insurance’s YouTube video showing you how confused or how unclear drivers that rideshare are about their insurance coverage.
Jennifer Podgorny, Managing Partner of Hoosier Insurance Agency, has over 10 years of insurance background ranging from working at captive and independent agencies and owning a captive insurance agency to helping her life partner, Jeff Podgorny, build an independent agency so they could offer their customers the best options, company’s and coverage’s at more affordable rates. She is a mother of a teenager and is committed to helping her community. Hoosier Insurance Agency is located in Schererville, IN, and offers personalized service the way YOU need it — phone, email, web, in-person office or in-person your home.