When the Uber and Lyft ride sharing services got started, they ran into trouble with taxi services and insurance companies. The taxi services saw these ride sharing companies as serious competition and, as it has turned out, the ride sharing apps are giving the taxi companies plenty of headaches.
The insurance companies were upset because the ride sharing apps completely ignored how auto insurance works and put a lot of people in harm’s way. The moment you take on a passenger as a ride sharing app driver, your personal auto insurance stopped working and you would be personally responsible for any damages or medical expenses. Has that changed over the years, or remained the same?
Personal Versus Commercial Auto Insurance
Auto insurance laws and products have changed a lot since the ride sharing apps came into existence, but those changes are only helpful if you understand them. If all you have on your vehicle is personal auto insurance and you get into an accident while driving for a ride sharing app, then none of your medical expenses or damages will be covered. You will also be informed that any damage you did to other people’s property will also be your personal financial responsibility.
Some insurance carriers have developed a product called Ride Sharing Auto Insurance that will cover you in certain situations. You will need to discuss this product with your insurance agent to find out if it is right for you. In all situations, carrying commercial auto insurance along with your personal insurance will cover your personal damages and injuries while working for a ride-sharing app.
What About The Passengers?
In any state where the ride sharing apps operate, they are required to carry a $1 million coverage guarantee for your passengers. This means that if you do get into an accident, the insurance coverage offered by the ride sharing app is supposed to cover all of your passenger’s injuries.
The reason that we say that the app coverage is “supposed to” cover passenger injuries is that sometimes the app insurance companies deny coverage for a variety of reasons. While more states are starting to crack down on ride sharing apps denying claims from passengers, it can still happen that your passenger might not have their medical expenses and lost wages covered by the ride sharing app coverage. If that happens, you can expect your passenger to personally sue you for those expenses and your auto insurance would not cover any of your legal costs.
Before you decide to drive for the ride sharing apps Lyft or Uber, you have to become familiar with the insurance situation. The ride sharing apps rely on their drivers to get the right kind of insurance to cover any driver medical expenses or damages, while the ride sharing apps offer extensive coverage for passengers. It is important to understand your insurance needs as a ride sharing driver before you take on your first passenger.