Home > Property & Casualty > Breaking down the basics of ride share insurance

Breaking down the basics of ride share insurance

hailingacabSuppose you were injured in an accident. Before setting a toe inside a public livery, what mode of livery transportation would afford you the better protection? State regulators are concerned about proper insurance coverage for ride share drivers, passengers and pedestrians ever since an Uber driver hit and killed a 6-year-old girl on New Year’s Eve.

The case forces us to ask the question, does a ride sharing insurance policy go far enough to fully protect people involved in accidents?

If a car is involved in an accident while used in a ride-sharing arrangement, who pays? Typical language in a personal auto policy, such as that found in typical Personal Auto Policy, excludes coverage with respect to “liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.” Recently, the insurance industry released an exclusion endorsement for vehicle-sharing arrangements as part of its personal auto program.

The major challenge for insurers centers on whether or not a driver was engaged in ride sharing when an accident occurred.

Ride share companies like Uber, Lyft, and Sidecar are responding to regulators by revising their insurance coverage.

What type of coverage is available? An Excess Liability Insurance policy is designed to act as primary insurance in the event that the driver’s personal insurance will cover only a portion of or none of the driver’s liability associated with an incident. Coverage is designed to cover driver liability for property damage and bodily injury of passengers and/or third parties up to a limit of $1M per incident.

Within the last few weeks, Lyft announced that it’s giving drivers the option of getting collision insurance to repair damage to their cars. It’s also offering protection against being hit by an uninsured or underinsured driver to its basic, $1-million commercial liability coverage. Uber has followed suit, but Sidecar has yet to add any of these additional yet.

When does coverage go into effect? Ride share companies state that coverage goes into effect once you are matched with a passenger for the time that you are on your way to pick up that passenger or have the passenger in your car.

Keep in mind that the types of coverage provided by these ride share companies can be offered at their discretion, meaning they can drop the coverage at any point.

State regulators, riders, and the public need to pressure ride-sharing companies to act accordingly and close all coverage gaps, and insurers should develop a product for drivers who carry riders on a part-time basis. Finally, ride share companies must be required to disclose to drivers and riders the risks they assume upon operating the vehicle.

About the Author

David Bardelli is a Senior Vice President in the Casualty Practice Leader for WGA. David has extensive knowledge with casualty risks, including technology healthcare, business services and miscellaneous manufacturing groups of all sizes.

617.646.0257 | DBardelli@wgains.com | Connect with David on LinkedIn

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