The two most popular ride sharing platforms have over 3.4 million drivers globally. When you consider that more than one third of Americans have used ride sharing services such as Uber or Lyft, it is easy to recognize that the taxi industry has been greatly disrupted. As more drivers hit the road, The Insurance Center would like to share the auto insurance implications of using those services.
“Drivers could be in for a shock if they are involved in an accident while using ride sharing services,” said Robert J. Sammon. “Many people have been denied coverage following an accident because they didn’t realize they needed additional coverage to use their vehicle for business purposes.”
Personal auto insurance policies are underwritten on the premise that vehicles will only be used by policyholders to drive themselves, friends, and family members. More importantly, it is understood that vehicles with regular auto coverage will be driven approximately 12,000 miles annually and that its use will not involve an exchange of money.
“There are different policies for drivers who use their car for commercial purposes,” Sammon said. “Those policies account for the additional mileage that motorists will accumulate as well as the frequency they will be on the road, especially during rush hours.”
The rise of automobile accidents involving ride sharing drivers support the concerns of the insurance industry. A recent study from the University of Chicago and Rice University found that the rise of ride sharing services increased traffic deaths by 2 to 3 percent — roughly the equivalent of 1,100 mortalities.
Indeed, driving for any ride sharing company increases the likelihood that the driver will be involved in an automobile accident. For those reasons, insurance providers require these motorists to purchase additional coverage.
“Commercial auto insurance will cost drivers more, but it will cost less than being uninsured and being involved in an accident,” Sammon said. “Not having the proper coverage could result in drivers having to pay bodily injury claims out-of-pocket, which can easily be over $15,000.”
The Insurance Center encourages motorists to call 603.542.2551 to make sure you are properly covered in the event of an accident.