Are You Covered? Insurance & Social Care Sharing

Insurance for Ride Sharing Programs

The advent and ease of use of phone apps and seamless payment systems has brought the idea of sharing into the mainstream. The appeal is straightforward and logical, and puts a capitalist spin on the value of sharing that has been has been taught for generations. Why not let someone else use your car or truck and make a little money on the side? But, before jumping in on the action, you may want to check your exposure in case of an accident. After all another age old expression is “look before you leap.”

Different Types of Ride Share Programs

Currently there are three different kinds of ride sharing programs. Transportation network companies (TNC), such as Uber and Lyft, use smartphone communications technology to allow customers to hail a driver through an app to provide them with a ride for a fee. Other social car sharing services, such as GetAround and Turo, help a vehicle owner rent his or her car to others. Still another ride sharing model, like ZipCar, provides company owned vehicles to members for personal or business use to drive by the hour or day. The GetAround and ZipCar programs that allow rental of the actual vehicle by others provide liability and property damage insurance coverage up to one million dollars while the vehicle is being used in the program. However, participation in ridesharing networks such as Uber and Lyft where the vehicle owner also provides the ride service presents a unique insurance challenge.

Accident Coverage in the Fine Print

In the U.S., Uber and Lyft use more than 150 thousand drivers who provide more than one million rides a day throughout the country. As independent contractors, Uber and Lyft drivers must provide their own personal vehicle, and vehicle insurance. As independent contractors, such drivers are alone responsible for damages resulting from an accident caused by their negligence, and proof of insurance is a requirement to becoming a driver for each TNC. However, because rideshare driving increases the risk of loss, most insurers in Massachusetts have a specific coverage exclusion for an auto while it is “being used as a public or livery conveyance.” This exclusion has been interpreted to exclude coverage while a vehicle is being used in a transportation network for a fee.

Although both Uber and Lyft provide their own insurance coverage of one million dollars liability and uninsured/underinsured coverage while there are passengers being transported in the vehicle, the companies provide only fifty thousand dollars in liability coverage for accidents while a driver is logged into the app but has not been matched with a passenger or while the driver is en route to pick up a passenger. The companies also provide comprehensive and collision insurance only with passengers and with high deductibles. However, recently, insurers have begun to fill this gap by offering relatively inexpensive rideshare endorsements. So far, in Massachusetts, only a handful of insurers, including AllState, Plymouth Rock and Mapfre, offer this gap coverage that extends private vehicle insurance to ridesharing service for a fee. Therefore, it may be wise to check with your insurance company or agent before joining a TNC and before that expected extra income becomes an unexpected headache.


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