In latest blow to drivers, ridesharing might require supplementary insurance  

Published on October 29, 2019

The number of people using rideshares is growing quickly — but that’s not necessarily all good news for drivers. In 2015, 15% of the U.S. population had reported using a rideshare service, just three years later that number has lept to over 35%. That represents millions of customers and billions of dollars for companies like Uber and Lyft. But Uber drivers who are having difficulty seeing profits have been striking and the company is reporting huge losses.

Part of this involves issues with insurance. Drivers who are looking for a part of this business have begun to sign up in droves. Estimates of how many drivers their currently are in the U.S. alone are around 1 – 1.5 million. Most drivers spend about four hours on the road on the days that they drive, making a little extra money for their side hustle. And, Uber speculated that their drivers are on the road for about 8.5 million total hours every day. That’s about 1000 years of total driving time for every revolution around the sun. And the business continues to grow, possibly beyond its capacity.

Heaping costs for drivers

Rideshare drivers also have to consider certain expenses and logistics. In order to drive for a rideshare company each driver needs to have a four door vehicle that has no cosmetic damage. The car needs to have 5 working seatbelts and usually be under a certain age. The person driving the car needs a valid driver’s license and to have the car recently inspected (some places even ask for inspection every four months). They also need to have personal auto insurance.

But one aspect of the insurance situation with rideshares that needs to be understood is that personal auto insurance does not cover every aspect of the rideshare process. Rideshare services like Uber and Lyft have their own policies that cover drivers, their vehicles and riders when they are working, however the definition of “working” for insurance purposes can be rather specific. The process can be confusing — I’m the first to admit.

What is covered?

Uber and Lyft offer some comprehensive coverage for drivers when they have engaged in a ride. This means from the moment a ride contacts them to the point where they deliver a rider to their chosen destination. During this time, Lyft and Uber offer a million dollar liability policy as well as other coverage. But when the driver is on the clock, but is not engaged in a ride the insurance situation can be a little confusing. A personal auto policy is no longer providing coverage, because the driver is technically engaged in a commercial enterprise, at the same time the rideshare companies are not providing full coverage either.

It’s for this interim period that drivers require specific rideshare insurance if they are to be fully covered. If a driver is in an accident when he is logged into the rideshare app, but is not currently engaged in a ride, Uber and Lyft do offer some limited liability insurance but the coverage is decidedly not comprehensive. That’s where rideshare insurance comes in.

The ugly truth

The insurance is a fixed cost insurance that is usually relatively inexpensive but must be considered a supplementary cost for drivers. Higher end coverage is around $20 a month, and can be as low as $6 a month for some insurance companies. It is a supplement for personal insurance, but is not offered for all plans in every state. Drivers who find that their plan does not have a rideshare insurance policy available are encouraged to look for a different plan or to look for commercial driver insurance. But commercial driver insurance is significantly more expensive than rideshare insurance, costing about $1,800 per year on average.

There are, however, some further benefits of rideshare insurance other than the “peace of mind” of being fully covered throughout the experience of driving. In some places this insurance can be taken off taxes, and the policy holder has a chance to use other perks of their insurance company which may include roadside assistance, safe-driving discounts, and options to bundle insurance to get discounts on homeowners and life insurance as well. Also, usually this insurance covers the costs associated with property damage.

Ultimately, it seems like an imperative for drivers who want to make that extra dollar to have this additional expense in mind if they want to be truly safe.

Sarah Archer is a Columnist at Grit Daily.

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