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Ride Sharing Insurance Coverage – Fact Or Fiction

In today’s tough economy, many people are using their vehicles to make extra money by joining a car for hire or transportation company network, such as Sidecar, Lyft, and Uber. These ride-sharing services use an app to connect people who need transportation with car owners looking for a quick source of income. Great idea, huh?

Hold on a second. Before you start driving around strangers for profit, read on.

Spoiler alert: If you’re thinking of hiring out your services to one of these networks, you better check your auto insurance coverage first – you may not be properly protected in case of an accident.

High-Tech Carpooling – Serious Insurance Policy Gaps
The California Public Utilities Commission (CPUC) requires ridesharing companies to carry liability insurance when drivers are operating cars on the companies’ behalf, but when, exactly that is, has still yet to be determined. Part of the confusion concerns the definition of the ridesharing business model. The companies view a driver is considered as “on the clock” when they decide to pick up passengers, and is “off the clock”, when they don’t have a passenger in their vehicle.

Last year, the CPUC created a new category of service called “Transportation Network Companies” to cover Sidecar, UberX, and Lyft, making California the first state to recognize such services.

In California, the legalities of insuring drivers who transport fares using ridesharing systems has been put under the spotlight, after a tragic New Year’s Eve accident in San Francisco, when an Uber driver struck and killed a 6-year-old girl. Because the driver was not carrying any passengers at the time, Uber has claimed that it is not liable. However, Uber is being sued for wrongful death and negligence, stating that the driver was logged onto Uber’s network at the time of the incident, and is therefore liable.

Ridesharing services have been shifting liability to drivers, frequently not informing drivers about their legal responsibility and potential lack of adequate insurance coverage. Because many standard personal auto insurance policies clearly reject coverage for commercial transportation services, this leaves the driver without insurance coverage in effect, with total responsibility. To be covered, drivers must purchase much more-costly commercial insurance; drivers are left with the burden of assuming most of the risk in case of accidents.

The California insurance industry is now warning drivers in these ride-sharing programs to pay close attention to the coverage that they have and to ask questions to make sure that they know when they are and are not protected by the company’s policy.

Insurance for Transportation Network Company Drivers
If you’re considering becoming a driver for a transportation service, save yourself some future grief, and check to see if your insurance policy will cover you when you’re on the clock accepting fares. If not, buy a commercial auto insurance policy.

Drivers who live in states that offer no-fault insurance could be in more trouble. No-fault auto insurance only covers private individuals; it may not cover a person driving for a commercial service. What does this leave the driver? Even though he or she lives in a no-fault state, they could be at fault, and on the hook for injuries and damages caused in an accident.

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