Driving for hire? Be sure to read the fine print!

By: Jessica Dellemann, CIC

Earning some extra money driving for Uber, Lyft, or similar companies might seem like a great way to help make ends meet.  Unfortunately, this seemingly harmless extra source of income could open you up to huge gaps in insurance coverage. Many individuals assume that the rideshare company is covering them for insurance, but that is not always the case.

Most personal auto insurance policies exclude drive-for-hire on their policies.  This means, without a special endorsement, you have NO COVERAGE from your auto insurance policy while you are driving for hire.  

No big deal, the drive-for-hire company is covering me!  Right?

Maybe! The insurance provided by drive-for-hire services varies.  Some drive-for-hire vendors provide coverage to their drivers only while they have a passenger (but not while you are driving around waiting for a passenger). Some rideshare vendors or food delivery services provide NO insurance coverage for the drivers at all.  Others provide a ridiculously low amount of insurance while you are driving for them. 

 No problem, my insurance company has an endorsement I can add…I'm fine, right?

Maybe! The available insurance products vary.  Some drive-for-hire endorsements may provide coverage up until the moment a passenger “hires” you.  Others provide coverage only when you are not “logged in” to the service.  Some only cover liability exposures, some cover physical damage to the vehicle as well. You can see where this gets tricky, and it gets worse. What happens if…

• You switch drive-for-hire vendors
• You use another vehicle while your typical vehicle is in the shop?
• Your spouse or family member starts driving with you or for you?

 Tips to avoid some of the potential gaps:

Ø  Consider purchasing a commercial auto policy. By doing this, you are not relying on coverage offered by the vendor. Be sure to list any drive-for-hire vehicles and list any person who will ever drive those vehicles (for business or personal use).  The downside is commercial auto policies can be expensive and may not seem worth it for the little bit of extra income you will be making.

Ø  Read the contracts!  Carefully read and review your drive-for-hire contract.  Know when you are covered and when are you not covered.  Then read your insurance contract or speak with your agent. As with any contract, consulting with an attorney or trusted legal advisor is recommended.

Ø  Understand that some personal auto insurance companies are ok with some vendors and not others.  For example, just because they approved Uber does not mean they will be ok with Grub Hub or vice versa.

Ø  Understand that most personal auto policy's drive-for-hire endorsements stop coverage the moment the ride-sharing app is turned on through the moment you drop off the passenger and are no longer accepting requests.  During that period, some rideshare/delivery services provide liability insurance, however, you must determine when the rideshare/delivery service coverage ends and make sure it aligns with the ride hare endorsement on your personal auto policy.

Ø  Choose to only drive for a vendor that has strong liability limits covering you when you are driving.

Ø  Some rideshare/delivery services offer coverage for comprehensive and collision as well.  Others do not! 

Ø  Let your agent know anytime you receive a notice of insurance coverage changes from the drive share vendor so your agent can try to fill any potential new gaps.

Ø  Understand that your agent will not be made aware of any changes in coverage offered by the rideshare/delivery company. The companies only notify the drivers.

Ø  Understand the rideshare/delivery policy may not provide you with the same amount of coverage for liability, comprehensive, collision, or any additional coverages that you have on your personal policy.  For example, you might have a souped-up policy with rental reimbursement, loan/lease GAP coverage, roadside, etc.  These coverages will typically not follow you while driving for hire.

Ø  Understand that a personal umbrella policy will NOT provide excess coverage over the top of the rideshare insurance for excluded activities. If it is not covered by your regular auto insurance policy, it is typically not covered by your umbrella policy.

Ø  Understand that the rideshare endorsement on a personal auto policy may only cover the specific person(s) and vehicle(s) designated in the drive-for-hire endorsement.

Armed with knowledge and the correct insurance, you are all set to go earn some extra money!

Insurance Service Center - De Pere, LLC is an independent insurance agency in De Pere, WI.  

Contact us at 920-337-9345   www.iscinsurance.com