Am I covered by my personal auto insurance if I drive for Uber or Lyft?

Ride-sharing companies provide taxi-like services by connecting passengers to drivers via a smart phone app. Rides can be arranged in advance or on short notice.

The official name for a ride-sharing business is a Transportation Network Company (TNC). TNCs contract with drivers who use their personal vehicles to transport passengers. Therefore, many of the drivers who work for TNCs do not have a livery driver’s license, and their cars are neither registered nor insured as commercial vehicles. These drivers are distinct from limousine or taxi drivers, who use a commercial vehicle and already have commercial insurance coverage.

Your personal auto insurance policy is unlikely to cover any expenses arising from accidents that occur when you’re driving for Uber, Lyft or any other TNC. Your insurer could even cancel your personal policy if it finds out you haven’t disclosed you work as a driver for a ridesharing service. Personal auto insurance policies are not designed, underwritten or priced for commercial ride-sharing; indeed, they typically exclude “livery services.” The assumption is that private-passenger motorists drive themselves, family members and friends, and have an average annual travel of 12,000 miles–and, of course, that no money is earned from these private trips.

A standard personal auto insurance policy stops providing coverage from the moment a driver logs into a TNC ride-sharing app to the moment the customer has exited the car and the transaction is closed. The TNC insurance policy typically only covers the driver once they have a passenger in the vehicle. This creates a gap between when the personal auto policy stops coverage and the TNC coverage begins.

Recently, several insurance companies have begun to offer endorsements which cover the gap between when the driver logs onto the app and when they have a driver in the vehicle. Not all insurance companies offer ride-share insurance policies, nor is coverage available in all states. If your current insurer doesn’t offer ride-share insurance, it’s time to look elsewhere

Prospective drivers should ask the TNC what level of coverage it provides. Drivers should also contact their own auto insurer to address gaps, if any, in their liability protection. It is also recommended that TNC drivers review a copy of their TNC’s insurance contracts so they know the exact terms and conditions of the coverage.

Source: Insurance Information Institute, 2017

Dan Smith is a licensed independent insurance agent located in Pittsburgh, Pennsylvania. He owns James L Smith Insurance and has been serving the insurance needs of customers in Pittsburgh, Pennsylvania for over 30 years. He is a graduate of the College of Insurance. You can get in touch with him by calling 412-531-3111 x112 or by emailing him at dan.smith@jlsins.net.  Find out more about Dan Smith by visiting his website at www.insurancepittsburgh.co. You can also follow Dan on Facebook @JamesLSmithInsurance  or Twitter @JamesLSmithIns.