Ridesharing Coverage If Your Customers Are Uber/Lyft Drivers

Throughout 2014, the topic of ridesharing began to pick up a lot of steam as states tried to figure out what to do with the new form of taxi service where ordinary people could turn their vehicles into money-makers by signing up with services like Uber and Lyft. For starters, some states weren’t at the point where they had to think about it because they didn’t have enough metropolitan areas to make it lucrative. Furthermore, in the areas where ridesharing was an option, taxi companies became concerned and, sometimes, outraged as to the new competition. But the biggest question regarding this practice to come out of the previous year was this one:

How does auto insurance work as a ridesharing driver?

ERIE Insurance polled a number of working Uber and Lyft drivers. Here were some of their somewhat disturbing responses.

  • “I’m not sure. I know that Uber’s insurance covers [some], but I’m not sure of the extent of the coverage to me. I guess that’s a little irresponsible on my behalf for not finding out the details.”
  • “I’m not sure. I’m assuming if it’s an accident they will cover the whole incident, or accident.”
  • “As far as who would kick in first, I really don’t know if it would be Lyft or my insurance company. I’m sure that Lyft would expect me to use my insurance company first but I really don’t know what the answer to that one is.”
  • “Ridesharing companies could definitely do a better job of clarifying how insurance works. I know a lot of drivers are very confused about that particularly when it comes to whether or not they should be insured as a private driver or have business insurance.
  • One respondent said that when he signed up for Lyft, he “wasn’t provided any instructions to alter the insurance, so when I got approved, I started driving.”
  • “They don’t proactively communicate enough,” agreed another. “If you ask them, they’ll tell you. But there’s not enough proactive communication if you don’t know the questions to ask.”

No wonder legislators and insurance companies themselves have been trying to figure out the next steps. ERIE Insurance took a proactive step in November by launching its own ridesharing supplement rider policy.

Cody Cook, auto product manager at ERIE Insurance Group, explains.

“So most people don’t realize that personal auto policies don’t cover vehicles that are being used as a taxi. So the way that this coverage works, is it actually fills that need by providing coverage in the instances such as with Uber and Lyft, when the vehicles become available for taxicab or public use and we believe this covers a serious insurance need for those Uber and Lyft drivers that are driving on an ERIE personal auto policy.”


In Summary

While the legislative fights will continue on a state-by-state basis, it’s time for individuals who are already ridesharing for extra money or those thinking about picking it up in 2015 to plan for the extra expense.

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