With the increasing populartity of "Car Sharing" services like Uber and Lyft, many people are considering driving for this type of service to make some additional income.
While the additional income may be nice, it is important to consider the insurance implications.
Most people have their car or truck insured on a personal auto policy. Most personal auto policies exclude coverage if or when the vehicle is used to deliver persons or property for a fee. So, if your car is being used to deliver another person, or to deliver food, newspapers, packages or other property, there may be no coverage on your policy when the vehicle is being used for that activity.
Copmpanies like Uber and Lyft are generally referred to as Transportation Network Companies, or a TNC. The TNC driver uses a smart phone application to be matched with passengers looking for rides, and payment is received by the driver from the passenger through the TNC app that both have on their phone.
Many personal auto policies will not provide any coverage once the driver turns the app on, and is available to be matched with a ride.
Ususally, the TNC will provide some coverage during this time. The coverage may be different depending on the "Time Period" you are currently in, and they will provide coverage for 3 periods:
1. When the driver has the app turned on, but has not accepted a ride
2. When a match has been made and accepted by the driver, but the passenger has not yet been picked up
3. When the passenger has been picked up and is actually occupying the vehicle, until the passenger exits the vehicle
Typically, the TNC will provide insurance coverage for the driver during these 3 time periods. For example, the TNC may provide minimum or low limits of liability coverage during period 1, with no coverage for damage to the car. During period 2 and 3 they may provide higher limits of liability, and also include coverage for damage to the car itself.
Because of this, there may be periods of time when a driver for a TNC company will have little or no insurance coverage, especially during period 1.
To solve this problem, some insurance companies are providing an endorsement to the personal auto policy that will provide additional coverage during the time when they are available or driving for the TNC. The cost of this endorsement and the coverage provided will vary by insurance company.
So, if you are currently driving for a TNC, or considering doing so, it is important to be aware of exactly what the TNC is providing for insurance coverage. You should also notify your insurance company and confirm what coverage you have now, and what additional coverage is avaialble for you. You would not want to find out that you have no coverage after an accident happens!
For any questions that you have about your auto insurance, contact us at Rongstad Insurance Services. We are happy to answer them for you!