Sharing a Ride, But Not Insurance:
Ridesharing drivers may face insurance coverage gap.

Driving strangers to make money for the holidays may seem like a great idea. After all, ridesharing services, such as Lyft and Uber, are becoming an increasingly popular way for people to earn money. However, you should be aware of potential gaps in insurance coverage. The National Association of Insurance Commissioners (NAIC) urges consumers to consider these tips before picking up their first passenger.

If you are thinking about hiring a driver through a ridesharing service, check out this consumer alert first.

Note: For the purposes of this consumer alert, 'ridesharing' is used to describe the practice of driving for hire using an online-enabled platform to connect drivers—who are using their personal vehicles—with passengers.

Understanding Ridesharing
Ridesharing uses mobile technology to connect passengers to drivers. Instead of hailing a cab from the curb or calling an 800 number, consumers can text a number or download an app to their smartphones that allows them to request a ride. The app also allows users to get price quotes for their trips, track the driver's location and to pay their fare using a credit card on file.

These services are provided by transportation network companies (TNCs). The two major TNCs are Uber and Lyft, although more are joining the market. TNCs allow drivers to use their personal vehicles to transport passengers and earn extra income.

Understand What’s Covered
As ridesharing becomes more popular, state insurance regulators have grown increasingly concerned about the insurance implications. The main issue is a possible gap in insurance coverage between the driver’s personal automobile insurance policy and the commercial policy maintained by the TNC.

Before signing up to drive for a TNC, talk to your insurer about what your personal policy covers if you are in an accident. Be aware that personal auto insurance typically excludes coverage for business use or when drivers are “available for hire.” This exclusion means that a driver’s standard personal auto insurance would not likely cover them while a  TNC application is turned on, even if they haven’t accepted a ride request and have no passengers in the vehicle.

The largest known TNCs operating in the U.S. only provide contingent liability coverage. If there is an accident, only third parties are covered for limited damages. . Due to coverage gaps with insurance provided by TNCs, you could be left to pay for physical damage to your vehicle and a personal injury in the event of an accident. You could also be on the hook if your vehicle is hit by an uninsured or underinsured driver as TNC insurance does not provide coverage for these situations.

The major TNCs provide primary insurance. Uber and Lyft also offer contingent collision and comprehensive coverage while the driver is actively engaged in a ride; the driver has accepted a ride request or has a passenger in the vehicle. Collision and comprehensive coverage is only available for TNC drivers who have elected to purchase these coverages on their personal auto insurance.

The coverage available and deductible amounts vary by TNC. Consider asking the TNC questions about its commercial policy:

  • How much liability insurance does the TNC provide while I'm transporting a passenger? Do I need more?
  • Will I be charged a deductible and what is it?
  • Is the commercial liability insurance coverage my main source of coverage, or is it contingent on denial by my personal auto policy?
  • How do I report a claim?

Find out what is covered by the TNC's commercial policy if you are involved in an accident in each of the following circumstances:

  • You are available for hire (logged into your ridesharing app) but have not accepted a ride request.
  • You are logged into your ridesharing app and are on your way to pick up a passenger.
  • You are logged into the ridesharing app and transporting a passenger.
  • You are unavailable for hire (not logged into your ridesharing app) and not transporting a passenger.
Beware that TNC coverage typically only applies while you have the app turned on. If you have turned off the app while still available for hire or you accept a street hail, you may not be covered by the TNC or your personal auto insurer. All states except New Hampshire have laws requiring drivers to maintain minimum liability limit while the vehicle is in use on public roadways. Failure to maintain the appropriate coverage could result in loss of your license or fines.

Protect Yourself as a Driver
Several insurers offer insurance products to fill coverage gaps and many insurers are now offering insurance specifically designed for TNC drivers. The premiums, type of coverage and limits available vary by insurer. Some policies only cover the period when you’re logged into a TNC app but have not accepted a ride request; others provide commercial auto coverage and apply regardless of whether you’re working or not. Availability of TNC coverage varies by state. Check with your insurance provider to find out more about what’s covered.

Several states have passed laws to regulate TNCs. In some states, laws determine what a driver is required to disclose. Many states have laws requiring you to maintain proof of TNC coverage in the vehicle when you are available for hire or logged into the ridesharing app. Several states require you to tell your personal auto insurer and anyone involved in the claim investigation whether or not you were logged into a TNC app and available for hire at the time of the accident. A few states also require the driver or the TNC to notify any lenders with an interest in the vehicle if it will be used for TNC services.

More Information
Contact your state insurance department to find out how it is handling matters involving ridesharing. You can also learn more about your state's requirements for personal auto insurance.

For more information about your insurance needs and tips for choosing the coverage that is best for you and your family, visit Insure U.

December 2015

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The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For consumer information, visit

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