Have you heard about Uber or Lyft? Both are popular “Ridesharing” companies that recently established franchises in Tulsa and Oklahoma City. These companies link mobile phone users who need a ride with owners of private passenger vehicles via customized apps. Online accounts for both riders and drivers allow for a “cashless” transaction (or “donation”) and promise safe, reliable transportation for the rider and a source of revenue for the driver. With the constantly rising costs of cars, auto maintenance, fuel, and insurance, and a young population increasingly interested in alternatives to ownership, these services are rapidly gaining in popularity.

To sign up to be a driver for Uber or Lyft, the applicant must own a 2000 or newer model vehicle, undergo a DMV and criminal background check, an in-person interview, vehicle inspections, safety training, and use a critical social network rating system to maintain driver status. Drivers must also have their own personal auto policy with liability limits that are at least the state minimum. The ridesharing companies maintain insurance policies that go into effect – with contingent liability – when drivers turn on the company app, and in excess liability while they are transporting passengers.

Initially, ridesharing seems like a great idea but raises some significant questions about liability if there is an accident that causes property damage or bodily injury. Many personal auto policies specifically exclude coverage for accidents if the driver is engaged in “livery” services (the business of keeping vehicles that people can hire) or if their personal auto is used for delivery.  The ridesharing company policy may pay out in the event that the driver’s personal insurance policy denies payment on a claim – but only over and above the coverage on the driver’s policy. So, if the driver doesn’t have comprehensive or collision coverage, the ridesharing company won’t provide coverage for a comprehensive or collision claim.

Unfortunately, there isn’t yet a simple solution for properly insuring a ridesharing car. Hopefully, auto insurance companies will quickly realize that there is a need for some sort of endorsement to fully protect drivers and passengers in these systems because they won’t be going away any time soon. If you are considering becoming a ridesharing provider, be sure to talk to your insurance agent to make sure you are covered appropriately. Call Tulsa Family Insurance to learn more about commercial or personal auto insurance.

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