A driver’s guide to insuring your ride sharing service ride. 

Hitching a ride with a stranger is nothing new. It’s just legal now - and becoming big business.

As per capita car ownership dropped in recent years – from one car for every 12 adults in 2000 to one car for every 14 adults in 2015 – car sharing services rose to fill the void.[1] Revenue from global ride sharing services is growing quickly and is expected to reach $6.5 billion by 2024.[2]

For millennials, it’s a new way of life. Only about 60% of today’s 18-year-olds have a driver’s license; some 43% of them even go so far as to call owning a car a hassle.[3] For baby boomers, participating in ride sharing is a way to supplement retirement funds that took a hit during the 2008 recession. A 2015 Uber study found that nearly a quarter of its drivers were older than 50.

Regardless of your age, as a driver, you’ll need to consider the risks that come along with sharing your car with others – namely proper insurance coverage. Or, you could be on the hook for a lot more than just getting from point A to point B.  

Are you covered with the right rideshare insurance?

Ride sharing offers those looking to make some extra cash an opportunity to do so without a big up-front investment – or so it seems. The problem is that having adequate rideshare insurance coverage to protect you and your passengers should you be involved in an accident isn’t so straightforward, and since ride sharing is relatively new, there’s little precedence in court to answer the question either. Consider the following:

Personal car insurance – While most car sharing companies claim that your personal car insurance policy, together with their company’s supplementary coverage, is adequate should your vehicle be involved in an accident while on the clock, many carriers and state/local regulators disagree. That’s because most personal car insurance policies exclude coverage for any business use of your vehicle, which means you risk having a claim denied should the insurer discover you’re hiring out your car.

Commercial car insurance – Taxis and other cars driven for business purposes have traditionally required a commercial insurance policy, and some states have already ruled that ride-hailing drivers must purchase such a policy to be covered. However, a commercial insurance policy costs significantly more than a personal policy, and requires drivers to first obtain a commercial driver’s license. 

Ride sharing policies – New policies – currently in 12 states and written by only a handful of carriers – are specifically designed to protect ride sharing drivers and their vehicles. While they may offer an optimal solution, these policies are not yet tried and true. Don’t forget to do your research and make sure to have a backup plan well.  

3 Best Practices to Safe Riding   

Ride-hailing companies view their drivers as independent contractors, or third-party vendors, that they work with. This means they don’t take responsibility for your actions. Here are a few ways you can protect yourself:   

  1. Stay in the know. Understanding the rideshare insurance provided by your ride sharing company requires a thorough reading of your contract, including all terms and conditions. Staying on top of the latest developments in the ride sharing market will be critical to ensuring you’ve got the coverage you need when you need it.
  2. Get the best rideshare insurance policy possible for your money. If you’re the one responsible for an accident that costs more than your policy will cover, the other side may go after you personally. This could put your home and any savings you have at risk.  Make sure you have the most robust policy possible.
  3. Consider the finances of it all. When you calculate how much you’re earning as a driver, don’t forget to factor in insurance costs as well.

Bon Voyage

Before you decide to drive for a ride sharing company, find out how your current auto policy works, and what type of rideshare insurance policy your ride sharing vendor maintains. Ask your HUB broker about affordable insurance options you should consider for ride sharing.

[1.] http://www.chicagotribune.com/classified/automotive/sc-millennials-autocover-1208-story.html

[2.] Navigant Research. 

[3.] http://www.latimes.com/business/autos/la-fi-hy-millennials-cars-20161223-story.html