3 Ways That Ridesharing Affects Personal Auto Insurance

February 26, 2018

Ridesharing has completely transformed modern day travel in ways that are good as well as bad.  The model avails flexible employment and creates amazing convenience, however, most people are not sure how these awesome changes in transport are affected by, or conflict with policies and laws that are currently in place.

Of utmost concern is how rideshare drivers are covered by insurance.  Even though you are using a personal vehicle at flexible times and probably carry personal accident insurance, an insurance company may refuse to pay up in the event of an accident claiming that at the time you were on the clock working as a commercial driver for whichever company you rideshare with. So what do you need to know about how rideshare affects your personal auto insurance?  Here are 3 important things to note:

  1. Should your Insurance Company find out that you are paid to drive, they can simply drop you. According to the standards of your insurance company, the fact that you are a rideshare driver means that you are a commercial driver.  As such, yours is a bigger risk because you are most likely on the road a lot more often than you otherwise would be.  This means that the risk exposure is greater and personal automobile insurance was never designed to take on such risk.

It is to remember that your insurance policy is in essence a contract that comes with terms.  It is drawn out based on provided information from you.  If you breach the contract by becoming a rideshare driver you are exposing yourself to risk.  They can legally walk away.

  1. Later on, your cost of personal car insurance may rise. Once the insurance company decides to cancel the policy, it may become difficult for you to find auto insurance that is affordable for the following reasons:
    • You must come clean. So as not to have your policy cancelled by another company it is important that you let them know about your activities with rideshare.
    • If you are dropped, then other insurance companies will consider you a driver that is high risk. Some of those companies may decide not to cover you, while others may opt to do so at higher premiums.

To avoid all this, it is better to take supplemental insurance for uber and lyft as well as other rideshare companies.

  1. The insurance taken by your rideshare company doesn’t cover every risk. Even though the rideshare company carries insurance, there are gaps in it.  During the period when you are available online but without a ride request, and you get into an accident in which you are at fault, you may find gaps as follows:
    • Vehicle damage is not covered so you will have to repair your car out of pocket
    • Not all lawsuit costs may covered. Since the liability coverage for the rideshare company is limited at this time, you may find yourself having to pay up from your pocket whatever lawsuit fees exceed what is stipulated in the policy.

However, if you are online and you have receive a ride request or you have a rider with you in the car, the rideshare company’s auto insurance should cover liability costs and vehicle repair as well.

 

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