Ridesharing has become increasingly more popular over the last year, particularly in large cities. Although providing this service to earn extra money or even as your primary source of income may be beneficial, there are many concerns from an insurance standpoint. If you are planning on driving for a ridesharing company it’s important to know that there are some insurance requirements.
What is the first thing to consider when applying to be an Uber or Lyft driver?
First and foremost, if you are contemplating driving for a Transportation Network Company (or TNC), your first call should be to your insurance agent. Most standard personal auto policies exclude coverage for public or livery conveyance, in other words, driving someone for a fee.
The Pennsylvania Insurance Department’s website provides information regarding rules that have been established by the Public Utility Commission for Uber and Lyft drivers. These rules require the companies to provide some coverage for drivers at certain points while a contractor (this is how the driver is classified by the TNC) is transporting customers.
The Public Utility Commission defines four stages of activity:
- Stage 0: When the driver is driving for personal reasons and the app is not active;
- Stage 1: When the driver opens the app and is logged in and looking for customers;
- Stage 2: When the driver receives and accepts a ride request and is traveling to pick up the passenger;
- Stage 3: When the driver is transporting the passenger until the passenger exits the vehicle at their final destination. There may still be gaps in your personal auto policy coverage.
You must always ask your insurance agent if your policy excludes coverage while driving for a TNC. If it doesn’t, what coverage is provided under these circumstances?
On the flip side, you should be asking the TNC the following questions before you start to drive for them:
- Does the TNC commercial policy provide comprehensive and collision coverage as well as liability?
- What are the coverage limits on their commercial policy?
- What are the deductibles for comprehensive and collision and who is responsible to pay the deductible?
- What is YOUR responsibility as the driver in the event of an accident during Stages 1, 2 or 3?
Another item to think about is the financial institution if you have a loan on your vehicle:
- Does the TNC commercial policy comply with the insurance requirements of your loan?
- If no, will I be put into force placed insurance? (Force Placed Insurance is a policy that protects the lender’s interest)
- How much does force placed insurance cost?
The most important step in your decision to drive for a TNC is to call your insurance agent. Be educated! Be aware! Be safe!
–Catherine Trump, CISR, Commercial Account Administrator