by Ken May
Many of us have not actually used Uber or Lyft buy I’ll bet that most of you have at least heard about them and know somewhat how it all works. It seems like a great job for a student, somebody who needs a flexible schedule or someone who was previously unemployed. The hours are flexible and the driver can work as much or as little as he or she wants. So what’s the problem?
The whole ridesharing thing started in 2009. They can offer lower rates than licensed taxis through the use of personal vehicles. This is also how they escape most of the commercial regulation, a point that I still don’t really understand.
Problem #1 is that many drivers (according to Property Casualty 360 up to 92% of them) haven’t told their personal insurance carrier that they are driving for one of the ridesharing companies.
Problem #2 is the fact that many “experts” are counseling new Uber or Lyft drivers through social media the dirty little secrets and tricks involved to get around higher premiums and exposure (see below).
You see, ridesharing creates a potential “livery exclusion”. In other words, a personal auto policy specifically states that there is no coverage if the vehicle is being used to transport people commercially to make a profit. Driving for profit creates a higher risk, the car drives more miles, the vehicle is often driven in known “hot zones” where the neighborhood is sketchy but the chance of getting a fare is higher, and then there is the unknown stranger (passenger) getting into your car with you (when I was young, my mom hammered home the point that you never give a ride to a stranger, you never pick up a hitchhiker. But now drivers are doing it on purpose? That’s pretty trusting.
Here are some of the gems gleamed online:
• “Don’t tell your insurance company that you are driving for Uber/Lyft. If you tell them, they will want more money for extra coverage”.
• If you ever have an accident, remove all of your Uber/Lyft signs and don’t tell your insurance company that you were doing this if you don’t have full coverage”.
• “If you never mentioned you were doing rideshare in the policy report, you may want to go with your personal insurance because Lyft won’t touch it without that high deductible. Don’t tell your insurance company that you were doing rideshare because they will either cancel you or your rate will go up”.
Rideshare companies offer generous liability coverage, often up to $1 Million for injuries. Comprehensive and collision coverage is available under certain conditions from the ridesharing service. The coverage between the personal auto policy and the rideshare company’s coverage depends on which “period” the driver was in when the accident occurred.
These are the “periods” for a rideshare driver:
• Offline – the driver’s app is turned off and it is assumed that the driver is not looking for riders. Easy-Peasy. This is personal use and the personal auto policy is in effect.
• Period 1 – The driver is online and available. He is driving around waiting for a ride request but hasn’t received one yet. If the driver has not added a rideshare endorsement to his personal auto policy, this creates a Gap in coverage during period 1. Neither the personal auto policy or the rideshare policy provides coverage.
• Periods 2 and 3 – The driver has received a request and is “on the way” to pick the rider up or has already picked the rider up and is transporting him.
Some drivers attempt to file a claim with their personal auto carrier during periods 1 and 2 because they are afraid that the ridesharing company will “deactivate” them and they will no longer be allowed to driver for the company. Or, they may do it because the deductible is lower on their personal policy.
One last rideshare deception that I read about recently is where drivers would put fake Uber or Lyft signs on their vehicle enabling them to stalk unsuspecting riders, particularly females.
The solution to all of this is pretty simple. Don’t lie. Don’t cheat. If you want to become a driver for Uber or Lyft, do it by the numbers. Before you start actually driving for a rideshare company, call your personal auto agent to see if your company offers a rideshare endorsement (to cover Period 1). If not, the agent can research his or her companies to come up with a good solution. And if you’re not sure? Don’t guess. Make the call for some professional advice.