Summary: Ride-sharing is the practice of using a personal automobile to pick up someone and give them a ride to a specific destination for a fee. The potential driver signs up with a Transportation Network Company (TNC) that generally checks the individual's background and driving record and inspects the vehicle. Once the person is approved as a driver, he is allowed to sign in to an application as a driver and can begin to pick up riders. Different companies have different requirements, although requirements are similar. There are a multitude of insurance issues, which are discussed in depth in Ride-sharing and Car-sharing. Various carriers are beginning to offer coverage; this article looks at those new coverages. Carriers started to provide coverage in Colorado first since Colorado has a law requiring ride-sharing drivers who carry a rider to have coverage from the time they sign on to the app to the time they accept a request for a ride. Coverage must be from the driver's personal auto policy, or the TNC is to carry primary coverage for when a driver is logged onto the app but does not have a passenger. Currently most TNCs do not provide such coverage.
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The standard ISO automobile policy contains the following exclusion:
5. For that "insured's" liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.
This Exclusion (A.5.) does not apply to a share-the-expense car pool.
Most other policies contain this or a very similar exclusion; carriers do not want to provide coverage for taxis or delivery services and that is what is being excluded. The exposures of someone regularly transporting other people for a fee is much greater than the driver who goes to work in the morning, sometimes goes out for lunch, and then drives back home.
Erie provides a way to remove the exclusion for livery service for those who list their vehicle as being used for business use. This provides coverage during every portion of the trip, from when the insured signs on to look for a passenger, when the insured is on route to pick up a passenger, when the insured is actively transporting a passenger, and after the passenger has been delivered. Coverage is offered in Illinois and Indiana initially, and depending on consumer response, coverage will be expanded to other states.
The GEICO coverage is available to new and existing ride-sharing drivers, including those working for Uber, Lyft, Sidecar and others. GEICO's policy replaces the insured's personal auto policy with one that covers both personal and ride-sharing exposures. The coverage applies whether or not the insured has a passenger or whether or not the app is on. The product is offered through GEICO Commercial, and rates are significantly lower than those for taxis.
USAA's coverage is a little different and provides coverage from the moment the insured turns on the app until they are matched with a passenger. The coverage was available in Colorado beginning in February 2015. This is a gap policy and provides coverage only between the turn on of the app and matching with a passenger. Without purchasing the gap coverage there is no coverage for ride-sharing. The cost is roughly $6 to $8 per month.
Farmers has also introduced a Rideshare Coverage endorsement in Colorado. Coverage began February 16, 2015, and is offered to existing and new coverage. The endorsement adds a 25 percent discount to the insured's premium. Coverage is applicable from when the insured turns on the ride-sharing app to when he accepts a request to transport a passenger. Coverage terminates once the insured has accepted a request for a ride. Coverage is also provided between rides and after the insured has dropped off a passenger until he has turned off the app.
MetLife has coordinated specifically with Lyft to provide coverage for its drivers engaged in ride-sharing. The coverages provided are bodily injury liability, property damage liability, medical payments, and physical damage. Coverage is provided for every stage of the trip and not just while the insured is looking for a passenger. Premiums are based on mileage driven. Coverage is provided by an endorsement and is available in Colorado.
These offerings are the start of what is bound to be a new type of coverage, as popular as ride-sharing has become. As more states develop insurance requirements, more carriers are apt to develop various coverage provisions that provide coverage for this new exposure.
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