Better make sure you’re covered if you get hurt as a passenger first.
Ridesharing is becoming more and more common around the country, especially in the larger cities. Cashing in on the new “sharing economy” and to a certain extent the coolness factor, companies like Lyft, Uber, Sidecar, eRideShare, and Ridester act as brokers or ride-sharing exchanges between prospective drivers and passengers. Drivers (of all experience levels) sign up with a service that charges a fee to connect passengers with drivers via a website or smartphone app and passengers arrange rides and pay with a credit card using the app.
While vexing to the regulated taxi business, this simple concept is thriving and seems likely to stick around. However, passengers are generally not aware of the risks they’re taking when the book a ride this way. Taxis are licensed by the state or a local authority and subject to strict standards, from vehicle inspection and driver licensing to insurance that protects passengers and others who could be hurt in an accident. The personal insurance of that friendly, moonlighting grad student behind the wheel generally excludes coverage when transporting passengers for a fee.
And it is insurance that is the crux of the matter. The big Transportation Network Companies, (TNC) like Uber and Lyft, are moving toward providing for their driver’s commercial exposure for liability and collision coverage. But the coordination with the driver’s personal auto policy can still leave an uninsured gap which can in some cases be significant.
Of course there is no way of knowing if an accident will occur, nor what kind it may be. (Hopefully, none!) But many of the insurance issues that have come to light recently have stemmed from catastrophic claims. One in California stands, where a six-year old girl died in a collision with a rideshare car.
While often downplayed by those who have an interest in the ridesharing business, coordination between the commercial and personal auto policies can pose major challenges. For example, the timing and circumstances of any accident will have a bearing on whether coverage extends to the driver and the passenger. Both Uber and Lyft make it clear on their terms and conditions pages that passengers assume risk in using their services. At this time, coverage gaps still exist in a number of circumstances and much remains to be worked out.
So how do you protect yourself? A visit to the Maryland Insurance Administration website can be informative. See what they say in their notice to TNC drivers. Ultimately, the decision is yours whether you want to book a ride with an unregulated ride-sharing company.
Freedom Insurance cares about your safety. Know the risks of using a ridesharing service and make an informed decision.