The rideshare industry has expanded at a fast pace since its debut in 2012. Last year, Uber executives estimated their drivers were providing 2 million rides a day worldwide. In the U.S., the growth has been so rapid that, when it comes to insurance, the nation’s regulators, insurers and drivers are all struggling to catch up.
A new survey found that many rideshare drivers may not have enough auto insurance coverage to fully protect themselves, and that they also don’t understand the risks involved. This raises implications not only for drivers, but also for the riders who use services like Uber and Lyft every day.
Rideshare insurance is complex and constantly evolving. Companies that provide rideshare services offer insurance protection for drivers during specific periods, but that protection drops considerably at other times. Generally, when drivers are waiting for a call, they are only fully protected if they are covered under certain personal rideshare insurance policies, and that coverage isn’t available in every state or from every insurer.
PERSONAL INSURANCE POLICIES MAY FALL SHORT
Relying on one’s personal insurance policy may not be enough. Some carriers’ personal policies don’t cover vehicles being used to transport passengers for a fee, and some may even cancel a driver’s coverage if he is involved in an accident while driving for a rideshare — particularly if the driver has not informed the insurance company that the car is being used for rideshare driving.
Passengers are mostly covered in case of an accident, but there may be gaps there, too. Both Uber and Lyft offer $1 million in coverage when passengers are in a rideshare car. In serious accidents, where injuries and damage can exceed $1 million, it gets more complicated. Riders can make a claim against the rideshare driver’s personal auto insurance, if available, or file a personal injury lawsuit against the rideshare company, but only in some states and under certain circumstances.
In an effort to examine how many rideshare drivers are paying for additional coverage, NerdWallet worked with SherpaShare, which provides an app that helps 50,000 rideshare drivers track mileage, earnings and expenses. The insurance coverage survey of 1,022 SherpaShare users across the U.S., conducted Jan. 26-Feb. 9, 2016, via the app and company blog, found that the majority of respondents may be underinsured, at least some of the time.
Many drivers don’t have extra coverage. 77% of respondents said they didn’t have additional rideshare insurance coverage on top of what their company provided, which puts them at risk while they are working, but waiting for a call. [MORE HERE]