Ride Sharing and Insurance
The insurance industry is busy responding to the relatively new challenge of Ride Sharing. You download an app to your phone, call for a ride from one place to another and someone shows up to give you a ride, often for much less and much faster than traditional livery services (Taxi’s). We have used these services and the drivers are happy, their cars are clean and they see this as a way to pick up some money at a flexible time that is right for them.
But, if you are doing this on the side with your personal car, you really need to check with your insurance agent. Most policies suspend your coverage if you are using your car to haul people or things for a fee. Because this exclusion is in your policy, you need to see how it applies to you.
In general, Insurance companies have addressed three phases of your ride. The first is when you are sitting there waiting to give the person a ride. Are you engaged in livery service or not? And guess what – Insurance companies are in disagreement. Some say you are holding yourself out as a livery service and therefore the exclusion kicks in. Some say you are just sitting there since you are not compelled to give anyone a ride, but may choose to do so or not. Better check with your agent.
The second phase is when you have committed to the ride, but are on your way to pick up the person who called you. Even though you have not picked them up yet, most insurance companies agree you are now a livery service.
The third phase is when you have picked up someone and are taking them somewhere for a fee. Classic test book example of a Livery Service. Very probably excluded from your personal car insurance.
To be fair, the ride sharing companies do offer various insurance coverages at a fee. They usually apply when your app is open (you are accepting customers). You may want to analyze these carefully if you decide to get into the business. And there are a growing number of companies that are offering or considering offering insurance for these situation.