How much coverage do Uber and Lyft drivers need?

Did you know that most personal auto policies don’t cover ride-sharing?

A Transportation Network Company (TNC) connects passengers with for-hire drivers through mobile applications. The most recognized ride-sharing companies are Uber and Lyft.

There are three phases to ride-sharing:

1. Period 1 – TNC application on, no passenger, trip not yet accepted.
2. Period 2 – TNC application on, ride request accepted, en-route to passenger pick-up.
3. Period 3 – TNC application on, passenger in vehicle, driving to destination.

There is no coverage available under most personal auto policies for customers driving for a TNC during periods one, two or three. 

Some TNCs provide a comprehensive commercial policy that covers their drivers with up to $1 million in bodily injury and property damage liability coverage.

As far as damage to the driver’s own vehicle, comprehensive and collision damage coverage is contingent under the TNC’s policy and also carries a $1,000 deductible. 

It is helpful to ask your existing or prospective policyholders if they are using their personal auto for a TNC. TNC coverage requirements can vary by state so it’s important to review the exposures and risks associated with driving for a TNC with your policyholders. Each TNC must disclose to their drivers the following:

• The TNC’s insurance coverage and limits of liability available while using the application (including uninsured motorists and underinsured motorists, and deductibles for comprehensive/collision coverage).
• The driver’s personal auto policy will not provide coverage for liability or damage to the driver’s vehicle while using the application.

Does your client need more coverage?

In most states, TNCs are only required to maintain at least $200,000 per occurrence to cover any liability from a driver in their network. Asking for the TNC’s coverage disclosure can help you and your customer craft an insurance solution that meets their needs. This can help them understand what is and is not covered by their personal auto policy and help them know to seek coverage from the TNC in the event of a claim while the application is active. 

The customer may want to purchase their own TNC policy to provide limits in excess of the limits provided by the Transportation Network Company. It is also important for the TNC driver to maintain a personal auto policy since the TNC coverage will not respond to a claim while the driver is not using the application. In an accident, authorities will request proof of the commercial policy provided by the TNC as well as the driver’s personal auto policy.

Ask your policyholders if they’re using their vehicles for ride-sharing so you can ensure they have the proper coverage.