Update: Ride sharing may create insurance gaps

Note: This is an update to a blog published in 2014.


Know the risks before using a ride sharing service.

Drivers and riders who participate in ride-share alternatives to taxi services may be subject to significant insurance gaps. If you participate in ride-share services as a driver or if you use these increasingly popular services, make sure you have appropriate insurance coverage.

Ride-share programs on the surface sound like a win-win situation: if you need a ride, you can download an app to your mobile device to find and arrange transportation in a driver’s personal vehicle. A simple swipe of your credit card pays the driver. So, instead of hailing a taxi cab — which can sometimes be hard to do — you can quickly get where you need to go and the driver is paid for his or her time and distance traveled.

Ride-share drivers, passengers, other drivers on the road and even pedestrians could all be affected by the insurance protection provided by the network companies that coordinate the ride-share relationship. Some ride-share network companies advertise that they have insurance policies that can protect drivers and their passengers. But there is no standard policy, and without a policy in hand, it becomes difficult to know which specific circumstances trigger coverage or what situations might be excluded.

Additionally, the insurance coverage provided by the ride sharing company may apply only while a passenger is actually in the vehicle. The policy may not provide coverage when the vehicle is on the way to pick up a passenger or after a passenger is dropped off. To complicate matters even further, protection provided by the primary insurer of the driver’s vehicle may exclude coverage while a passenger is in the vehicle or even while the ride-sharing app is turned on or enabled, whether or not a passenger is in the vehicle. This could result in a significant coverage gap for the driver in the event of a loss.

If you or a driver in your family is interested in providing transportation services through a ride-share service, check with your insurance agent first to learn about uninsured liability you may be assuming and what, if any, coverage is provided by your personal auto policy. Personal auto policies were not designed to cover exposures such as ride-sharing, and livery is typically excluded. Ride-share drivers cannot assume that their personal auto insurance will provide protection for anyone injured or any property damaged in an accident, even if they provide transportation-for-hire only on a part-time or incidental basis.

Riders planning to use ride-share services also should consider the risks. If you are injured while using one of these services, will your medical expenses be covered? Would you be compensated for the time lost from work that your injury might cause? Ask to see proof of insurance before using a ride-share service.

The ride-share industry is changing rapidly, and states are gearing up to provide more oversight and regulation. Until they do, consider carefully the risks you take on as a rider or driver.


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3 Responses to “Update: Ride sharing may create insurance gaps”

  1. Heather Holdsworth

    Thanks, there was an interview last week on NPR about all the dangers of Uber. The company is not regulated well and there are no vehicle inspections, or comprehensive background checks for drivers. Many of the drivers are convicted felons.

    The cab companies are stepping up their game to compete or possibly monopolize once again the industry. Many people like with insurance , are willing to take the risks associated with saving a few bucks.

  2. Jay

    Lyft sent me two drivers. One was very professional and followed all the rules. The ride home seemed less legitimate. The driver was speeding and looked upset or intoxicated.

  3. Daniel Willis

    This is a 100% right idea. On a driver’s driving style the probability of getting into an accident depends. Racers and motorcyclists especially often get into accidents. However, middle-aged woman and very neat drivers rarely get into accidents.

    Driving manner of a driver may be learned from the vehicle look. If it is the latest sports car, it is of a great probability that the driver is a fan of driving fast.

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