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Personal Risk Management

Crafting the Right Coverage for Uber and Lyft Drivers

Robin Olson | October 26, 2018

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Car-sharing app on cell phone

Many personal lines agents and brokers have insureds who drive for a ridesharing company such as Uber or Lyft. Yet, these clients may not be properly insured for this activity.

Once you identify these individuals, consider the three phases of ridesharing to understand the possible coverage ramifications and then offer recommendations to those clients to effectively fill those potential coverage gaps.

Uncover Your Ridesharing Clients

To start, determine those personal auto clients who drive for a ridesharing company. (Ridesharing involves the personal automobile owner transporting passengers with the owner's vehicle on short trips.) So, reach out to your auto client base and advise your ridesharing drivers of potential coverage gaps.

Recognize the Three Phases of Ridesharing

To explain how best to insure your clients who drive for ridesharing companies, consider the three phases of ridesharing.

Three Phases of Ridesharing - Olson - October 2018

Phase 1—The app is on, but a ride connection is pending. The Uber/Lyft insurance coverage is liability only (excess over any possible personal auto insurance) during this phase with typically low limits.

Phase 2—A trip is now accepted, with the driver in route to pick up the passenger. The ridesharing insurance coverage (still excess) is deeper and broader during this phase, but gaps may still exist.

Phase 3—The passenger is picked up, and the trip is on! The ridesharing company's insurance is similar to phase 2 coverage (but now primary). The personal auto policy (PAP) provides absolutely no coverage during this phase.

Now, consider specific coverage recommendations.

Recommendations To Fill Ridesharing Gaps

Although a few state variations may apply, the following recommendations will prove helpful to your Uber- and Lyft-driving clients.

  • Add the broadest endorsement, such as the Insurance Services Office, Inc., Transportation Network Driver Coverage (No Passenger) (PP 23 41) endorsement, to the auto policy for protection during phases 1 and 2. With this endorsement, the PAP provides primary coverage, and the ridesharing company's insurance is excess.
  • If a jurisdiction does not permit a PAP endorsement, procure a business auto policy for your client (primary coverage).
  • Advise your client to purchase any optional insurance from the ridesharing company.
  • Consider increasing your insured's auto liability limits.
  • Communicate to your client the limitations of the ridesharing company's insurance (e.g., Lyft's $2,500 physical damage deductible).

Become Your Client's Personal Risk Manager

This process is a reminder to evolve from simply selling insurance to becoming your insured's personal risk manager. Your clients will thank you, and your retention rates will inevitably increase.

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