Ridesharing services provided by Uber, Lyft and similar transportation network companies (TNCs) rely on smartphone apps to connect passengers with independent drivers. TNCs entered the marketplace several years ago and have been growing quickly because there are few barriers to entry. Initially, TNCs escaped insurance requirements and other costly regulations imposed on taxis. However, TNCs are now being scrutinized by insurance and other regulators seeking to ensure that TNCs and their drivers are adequately insured.

TNCs do not own the vehicles that provide ridesharing services or employ the drivers. The driver and the vehicle are independent of the TNC when not “on duty.” However, going “on duty” is as simple as pressing a button on the driver’s smart phone app, signaling that the car is available to accept passengers. The driver accepts an assignment – or is “matched” with a passenger – and then proceeds to the passenger pick-up site. The assignment ends when the passenger is dropped off.

A rideshare driver is typically covered under two insurance policies – the driver’s personal auto policy covering the vehicle and the TNC’s commercial auto policy covering all vehicles when operating on behalf of the TNC. A driver’s personal auto policy typically contains an exclusion that negates coverage when the vehicle is used “for hire.” Therefore, most rideshare drivers’ personal auto policies do not provide coverage when a passenger is in the vehicle. This leaves the TNC’s commercial policy, which provides coverage when the vehicle is being used for TNC’s operations.