What Ridesharing Drivers Should Know About The Limitations Of Personal Car Insurance And Their Best Options For Coverage
Ridesharing has seen explosive growth in the past few years and has been the major reason behind a culture shift in how passengers find cars for hire. However, as is common with other rapid shifts driven by technology, ridesharing has forced established businesses and industries to reconsider their methods. One business area that has changed in response to this new phenomenon is the car insurance industry. Conventional car insurance policies and coverages are often inadequate to address the unique needs of rideshare drivers. That means if you are a rideshare driver, you should understand your options regarding insurance and what types of coverage are best for you. Below is more information on how you can best protect yourself from financial catastrophe if you are a rideshare driver:
Conventional personal car insurance limitations
Unfortunately for many rideshare drivers, conventional personal car insurance policies are typically limited in their scope of coverage if the covered vehicle is being used for a commercial purpose. Ridesharing is an activity that straddles the fence between commercial driving and personal driving, and the ambiguous nature of the practice has forced insurance companies to reconsider their coverage options. As a result, if you are involved in a car accident while transporting a paying passenger or even while logged into the ridesharing company's app, many personal insurance carriers will refuse to pay out on a claim. Of course, during non-business periods, your car will still be covered as a personal automobile, but there is substantial risk if you are hoping your personal auto coverage will be of any use during a ridesharing incident. That means you will need to search for alternatives that will provide you with a financial safety net in the event of an accident.
Your options for insurance coverage
Since it is unlikely your personal car insurance policy will cover a ridesharing accident, you are faced with choosing from among several options to get the coverage you need. Below are a few options that you should consider when evaluating your insurance status:
Ridesharing company insurance coverage - Many major ridesharing providers will cover their drivers with policies that pay for liability claims in the event of an accident. These policies are often quite expansive, covering both injury and property damage claims, and they provide strong financial protection for many on-duty drivers. However, keep in mind that such coverage has a narrow scope of time when it is actually effective. For example, it is often the case that coverage only exists when a driver is carrying a paying passenger.
Commercial car insurance policy - Another option for ridesharing drivers is to purchase a commercial auto insurance policy. These policies are usually extensive in their scope and provide strong coverage options for drivers. For example, a commercial policy includes coverage for uninsured motorists and has other perks, such as towing coverage, that might not be found in a company-provided policy. The downside of commercial car insurance, however, is the high premium cost for its purchasers. It is not unusual for commercial car insurance to exceed well over $2,000 per year. And, if you are forced to buy coverage that is suitable for taxicab operators, then annual premiums exceeding $5,000 are the industry standard.
Personal car insurance add-on product - This is the newest option for rideshare drivers, and while it isn't available to all drivers depending on their state of residence, purchasing an add-on to an existing personal policy can be a financially sound practice for drivers. Essentially, personal add-on insurance provides an extension of coverage for drivers in all circumstances when they are behind the wheel of their car. This helps eliminate potential gray areas for drivers who aren't sure about their coverage in a given scenario. As an example, it can be difficult to determine when a driver is "on duty" or "off duty", and the add-on for ridesharing helps make such a determination a moot issue in the event of an accident.
Talk to a car insurance company for more about this topic.