Uber and Lyft: Trouble in Insurance Paradise

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Uber and Lyft: Trouble in Insurance Paradise

As Uber and Lyft have grown in popularity and are dominating the transportation industry, auto insurance companies have expanded their effort to meet the demand from drivers for coverage. Usually, rideshare insurance covers personal use of vehicles and adds coverage for at least part of the time that drivers are signed into a ride sharing app.

However, not all insurance companies offer rideshare insurance policies, or coverage is restricted in certain states. If rideshare insurance isn’t available in a state, the driver will have to buy a commercial auto policy to be properly insured. If your rideshare company insures you during all the phases of the job, (including before, during, and after ride requests), or if you have a commercial auto policy, the driver won’t need separate rideshare coverage.

In 2015,  Uber and Lyft drivers were afraid they were going to have to pay considerable amounts for their insurance because of the scrutiny surrounding the companies due to safety issues that arose from the lack of regulation. Under Senate Bill 172, drivers were required to carry a $1 million minimum insurance policy when shuttling passengers. The insurance requirements took effect in January of 2016. Legislation regarding insurance requirements has been a very complex work in progress in Louisiana, especially because many drivers thought the insurance that came with their job would cover them at all times.

Uber provides insurance for all of its contractors. As an Uber rideshare driver – partner, you’re covered while online. While the driver is online with Uber before accepting a request, they are covered by Uber’s insurance policy for your liability to a third party if you are in an accident when you’re at fault. A third party is someone or something other than yourself or your vehicle. Coverage includes your liability to pay another driver’s or another person’s medical bills or to pay for property damage, such as a damaged fence.

These policies are only in force from the time a driver accepted a trip from the app until the driver dropped the passenger off, and this leaves the driver’s own insurance policy on the hook. Unfortunately for rideshare drivers, nearly every personal auto insurance policy specifically excludes coverage if the driver is engaged in commercial activities such as pizza delivery, or say, acting as a taxi. This exclusion led to a lot of lies to insurance companies by these drivers, not to mention a lot of denied claims. Even if an insurer decided to cover a rideshare claim, the driver often received a cancellation notice in the mail shortly after the check cleared.

It’s always important to stay informed when beginning to work as an independent contractor to protect yourself and your customers, especially on the road. Rideshare drivers should always look at what is and isn’t covered with the combination of their personal auto insurance policies and the rideshare company’s insurance. If there are gaps, look specifically at rideshare insurance or even a commercial auto policy.

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Melinda Martin

Account Executive

Melinda began her insurance career in 1985 with Alexander & Alexander where she received her Property & Casualty and Life & Health license. Since then she has worked at various agencies in the New Orleans area and in California as a senior account manager for Employee Benefit Plans.  While in California, she was also the Membership Director for the Burbank Chamber of Commerce. Melinda joined the AWS team in July of 2015.

Michael A. Seeling

Vice President

Graduated from the University of Louisiana at Lafayette with a B.A. in Insurance Risk Management and is a graduate of Archbishop Rummel High School in New Orleans. He joined AWS in October of 2008 and has been awarded the Patient Protection and Affordable Care Act Certification (PPACA). Additionally, he is working towards his Certified Insurance Counselor (CIC), Registered Health Underwriter (RHU), and Registered Employee Benefits Consultant (REBC) designations. He is also a member of the National Association of Health Underwriters (NAHU), National Association of Insurance Financial Advisors (NAIFA), and is an active member of the Fore!Kids foundation.

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