Ridesharing is a relatively new phenomenon that has turned the entire industry on its head. It has been a tremendous convenience for consumers tired of long waits, rude drivers and high fares using traditional taxi services. However, for insurance companies, it offered a new challenge that they were originally unprepared to handle. Is a rideshare driver commercial, like a livery service, or are they more like a car pool?
Almost all companies decided that it was a livery service, like a traditional taxi company. Rideshare companies like Uber and Lyft didn’t initially have an answer to this, not thinking it would be a problem. How is ride-sharing any different than car-pooling? To insurance companies, you don’t carpool with strangers and pay them.
Drivers responded in one of two ways. The first was by obtaining commercial driver insurance. This was, and is, a foolproof way of covering themselves in all circumstances. On the other hand, it is often five times more expensive that private automobile insurance. Most, however, simply didn’t disclose that they were involved in ridesharing. This worked fine if a driver didn’t have an accident. If they did, though, and the insurance company found out about it, the driver was most often denied a claim in the case of an accident, and usually also dropped from the insurance to boot.
As it became clear that the insurance industry was not going to change their stance. The ride-sharing companies soon answered by offering their own insurance to ride-sharing drivers… in some circumstances. If a driver has a passenger in the car, the ride-share company will cover you. If you have scheduled a ride with a passenger and are on the way to pick them up, you will also be covered, though you may have to pay a higher comprehensive or collision deductible.
However, with both of these circumstances, there is a potential problem. Technically, both Uber and Lyft ask their drivers to file a claim with their own insurance company first. If that claim is denied by the driver’s own insurance, the ridesharing insurance will cover the claim. The problem: having companies that see rideshare driving as a commercial activity. If you haven’t disclosed that you’re an on-demand driver in the past, you face the possibility that your personal insurance company will subsequently drop your coverage. There’s always the option to say no when asked the question, but this is fraud.
Things get even more problematic when a driver has turned on the ridesharing application, but hasn't yet been matched with a passenger. In this circumstance, the rideshare companies DO offer some coverage, but it is only for liability insurance. Liability insurance will cover damage to another car and that driver’s injuries. What it doesn’t cover is any damage to your car, or even your coverage for your own personal injuries.
This “hole” caused many problems for many drivers. But the insurance industry, seeing this “grey area” has begun to respond. Knowing that it isn’t likely that ridesharing is going away, and also knowing that there should be a motivation for drivers to disclose their driving status, some companies are now offering their own ridesharing insurance.
What does this look like? Primarily, it covers driver’s for damage to their own vehicle and personal injuries for the period when a driver is logged in, but hadn’t been matched with a passenger. There are some other plusses to the new coverage as well. For one, it often offers much lower deductible levels for comprehensive and collision coverage for the period when a match has been made, but the passenger hasn’t been picked up. This could be the difference between a $500 deductible with your personal policy and up to a $2500 deductible with your ridesharing insurance. Maybe they all know whether you’re a rideshare driver, and will not drop coverage in the event of an accident.
As with anything, however, there’s a catch. Not every insurance company offers this coverage, and furthermore, there is a difference in how deductibles are handled during that period when a driver has been matched, but not picked up.
This is why it is very important for a driver that wants to be safest to find out who offers the insurance and what they’ll cover. This can be confusing and lengthy for a driver to do on their own. Fortunately, CoverHound has licensed agents that can help. They can do this by asking one set of questions and giving you quotes from a number of companies that now offer this coverage.
Make sure that you are fully protected. Visit CoverHound to get the right rideshare insurance with CoverHound today.
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