Ridesharing continues to impact the transportation industry and shows no sign of applying the brakes. According to Research and Markets, the global ridesharing market is now valued at around $189.25 billion.
What new entrants to the market mean for insurance
Ridesharing companies like Uber and Lyft resemble livery services. A ridesharing driver operates much like a cab driver, with the primary difference being how the customer arranges the ride. Because of the similarities, insurance for both types of services is often similar.
Peer-to-peer rental services have also entered the market. Companies like Getaround and Turo fall into this category. These services allow car owners to rent out their cars for payment, like a driver would rent a car from an established rental car company. These relatively new and different scenarios mean insurance companies must balance largely unknown risks with extended coverage.
Because of the growing popularity of ridesharing, many insurance companies now offer hybrid policies that combine personal and business auto coverage. As a result, most personal auto policies exclude coverage for vehicles used in a commercial capacity. Some companies offer ridesharing endorsements for drivers using their vehicles for personal and commercial purposes. The endorsement is added to the existing personal auto policy for a fee.
Limitations of insurance through ridesharing companies
Companies like Uber and Lyft offer limited commercial coverage to drivers using their personal vehicles. It’s important to note that there are specific rules governing when this type of policy becomes active.
For example, coverage through ridesharing companies usually applies only while the ridesharing app is turned on. If the app is turned off but the driver is still available for hire or accepts a street hail, the ridesharing company’s insurance policy might not apply. Relying solely on the ridesharing company’s insurance policy could create a coverage gap.
To avoid coverage gaps, closely review your client’s ridesharing company policy and clarify any limits and exclusions. A thorough review also ensures the policy doesn’t offer coverage your client doesn't need.
Also, pay attention to state regulations, as they can impact policy language and limits. Several states have already enacted legislation applying to ridesharing services. Many other states are actively reviewing the insurance risks related to this market.
Additional considerations
Here are several questions to help you assess your client's coverage options:
- Where do they provide ridesharing services? This location may be rated differently from where the vehicle is garaged.
- Do they work for the ridesharing service full time or part time?
- How many miles do they expect to put on the vehicle?
- Has there been a change in the vehicle's use, from personal to primarily commercial?
Ridesharing presents unique risks that are still being identified and assessed. As the market matures, insurance companies and state regulators are working with ridesharing companies and drivers to establish guidelines and craft suitable coverage for ridesharing.