Ridesharing and Insurance

October 1, 2019

Ridesharing businesses, such as Uber and Lyft, have grown in popularity over the past few years. Known as Transportation Network Companies (TNC), these types of companies have caused a stir in the insurance industry. Unlike traditional taxis, TNC businesses contract with drivers who use their personal vehicles, and insurance, to transport passengers. Many of the drivers who work for TNCs do not have a livery driver’s license, a legal requirement for taxi drivers, and their cars are neither registered nor insured as commercial vehicles.

Insurers and insurance regulators are concerned about misconceptions regarding the use of personal auto policies by TNC drivers. Personal auto insurance policies are not designed, underwritten, or priced for commercial ridesharing; in fact, they typically exclude “livery services.”

Like conventional taxicab companies, TNCs are commercial enterprises. In order to have coverage, TNC drivers need commercial insurance coverages — just like taxi and livery car drivers.

However, a standard personal auto policy generally does not provide coverage for ridesharing. Rather, such policy stops providing coverage from the moment a driver logs into a TNC ride-sharing app to the moment the customer has exited the car and the transaction is closed.

Recognizing this coverage gap, lawmakers have been working to enact legislation that specifies what insurance coverage is needed to operate legally from app-on to app-off.

As an ever-evolving sector, insurance and ridesharing offer a unique challenge, one that you and your insurance company should keep a close eye on. For now, current and prospective drivers should ask the TNC what level of coverage it provides, and drivers should contact their own auto insurer to address gaps, if any, in their liability protection.