How is Ride Sharing Impacting Auto Insurance

In this era of technological advances, there are a lot of phenomenon’s’ our country is dealing with that we have never experienced before. These changes are causing some big changes especially in the insurance industry.  Drones, Driverless Cars, and ride-sharing are some of the main technological advances that are impacting the industry. Not all insurance companies have caught up to the technological advances the industry is facing. This is most apparent when it comes to ride-sharing companies.

At least for now, and are quickly changing how Americans get around in some parts of the country. Both companies offer an opportunity for individuals to make money off their personal vehicle by simply giving others a ride for a fee. This form of ride-sharing is a trend that is now developing into a major industry. This is an industry that insurance companies along with state lawmakers, have had to quickly make adjustments to deal with the new risks facing the community and industry. Most states are quickly adapting to this new form of transportation. Naturally, some states are more accommodating than other states. As you would expect and the same goes with insurance companies. Here are some ways ride sharing is impacting the insurance industry and how you can make sure you are adequately protected in the event you decide to drive for one of these ride-sharing companies.

 What does Ride-Sharing have to do with Insurance?

Business use is excluded from most personal auto policies. Many carriers have “business use” as an option that can be added. It is important as a driver for you to know what that means. The coverage can vary greatly from carrier to carrier. So if you are driving for one of the new or existing Ride-Sharing companies it is important to know your personal auto coverage very well. If ride-sharing is not covered in any way, you really should take action. Either by determining how much there is in . Not all insurance companies offer ride-sharing coverage so you may have to change carriers.

Limits, limits limits….

Insurance agents will preach to you that the state minimum limits are very risky for your personal auto policy. In a state like is $25,000 for bodily injury, $50,000 for total bodily injury and $10,000 for total property damage. Mandatory “no-fault” coverage of $50,000 is also required. When buying this policy, it is important to think about the last time you went to the doctor with anything serious. It is not too far-fetched for these limits to be met in the event of a serious vehicle accident. Consider if you were to have a paying customer in the car or possibly multiple. In the event of a serious accident, ride-sharing can bring about enormous liability for the driver. When purchasing separate commercial insurance as a ride-sharing driver, the limits of your policy are something that need to be addressed with your insurance agent. Even if your insurance carrier says they will cover the claim it is important for you to get clarification of the coverage. The coverage doesn’t matter as much if the limit of the coverage is too small to cover the claims.

For example; If a driver for a ride-sharing company were to get in an accident which caused injuries to the another person. These injuries resulted in bodily injury claims of $90,000. If you have state minimum limits in New York with $25,000 in bodily injury liability per person this means $65,000 of the damages are not covered by your insurance policy. This liability is now your responsibility. A driver can prevent this situation by speaking honestly with their insurance agent about the coverage and limits they truly need.

The amount an agent would recommend for auto insurance is going to vary on your individual circumstances and risk. Most agents recommend for at least limits of at least $1 Million combined single limit. This allows you the driver a sufficient amount of coverage in order to make sure your claims are covered to the amount you need. The minimum limits we would typically recommend for a personal auto policy are around $100,000 bodily injury for each person, $300,000 for bodily injury liability for each accident and $100,000 Property Damage Liability. If you add the ride-share exposure, increasing those limits to at least $500,000 or $1 Million individually or combined single limit is better to make sure your protected for the full amount you need. This does cost slightly more in premium. However, if a claim occurs the premium difference is the last thing you are going to worry about. Especially if your limits are less than the cost of the accident.

Many if not most ride-share drivers are working with only a personal insurance policy and the additional insurance provided by the company they are driving for. There are three things that complicate this issue: driving a vehicle that is used for both personal and business use, companies do not consider driver’s employees and the vehicles are owned by the drivers and not the companies. This really complicates the liability issues when an accident occurs. Most people driving for a ride sharing company for extra income do not foresee the enormous liability they are taking on. The ride-sharing companies do anticipate this risk and have the money to hire many lawyers that have created the policy to benefit the company over the driver. This can leave the drivers at an extreme disadvantage in the event of an accident. This is a disadvantage that can be prevented with a simple phone call and a 20-minute conversation with an experienced commercial insurance agent.


Mitchell Sharp is a Marketing Associate for . Mitchell has extensive knowledge of workers’ compensation and cyber liability. His passion is in using his knowledge of commercial insurance, social media and content marketing to benefit the small business community.

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