Drivers and Passengers Beware!
While reviewing a Personal Auto Policy renewal for a client, I noticed that a new form had been added to the list of endorsements and forms. It was called “Ride Sharing Advisory Notice 1.” It immediately caught my attention and I had to pull it up to read it in more detail. It brought to the forefront of my mind what most insurance agents already know: The Personal Auto Policy (PAP) contains an exclusion for liability while the vehicle is being used as a public or livery conveyance.
My blood froze for a moment as I realized that consumers are probably not aware of this potentially rather far reaching drawback! All kinds of questions popped up such as if e.g. the Uber car I was a passenger in got broadsided and I was severely insured or disabled, who’s policy would cover me? We just learned that there is a potential gap in coverage with the exclusion for liability while the vehicle is being used as a public or livery conveyance. How would my medical expenses be paid? Usually health insurance doesn’t cover for car accidents but if it did I am still subject to co-insurance and co-pays. What if I was rear-ended by a ride-sharing car and the driver of the ride-sharing car was clearly at fault, would that driver’s Auto Insurance Provider deny coverage because he was using the vehicle as a public or livery conveyance. What recourse would I have if any? I thought about our customers who might be using their vehicle as a ride-sharing vehicle in order to make a little extra cash on the side. If they had an accident and their passenger got injured and sued them could they potentially go bankrupt? Is that extra cash on the side worth it? Are you really saving $10 on an occasional taxi trip if you risk having to dip into your savings to cover your medical bills if you’re injured?
Three weeks ago I had a concert to go to in NYC with one of my friends. We had to go from Penn Station to 82nd Street on the West side. Her daughter-in-law had shown her an app for Lyft and my friend suggested we use it. She was quite excited about it; mostly about “the money we would save” and not having to use the subway. Needless to say that being an insurance agent, I opted to take the subway. My second choice would have been a yellow cab.
Ride-sharing arrangements through Transportation Network Companies (TNCs) are all the rage in this world of smart phone apps, immediate gratification and rooting for the “little guy” by thinking you’re pulling one over on the Taxi and Limousine Commission. TNCs do have insurance policies in place of course being a business 2. But regardless, prospective drivers and passengers should inquire what kind of coverage is provided before getting behind the wheel or in the backseat. In addition, coverage will vary from state to state. State legislators and state insurers are starting to address the gaps in coverage to better protect the drivers and the passengers 3.
Today is New Year’s Eve and hopefully most people will make the right choice to not drink and drive. But before you pull out your smart phone to arrange for a ride, consider the potential long term consequences. Should you decide that the odds are in your favor ask a few questions of the driver about the level of coverage in place. In the end, however you decide to get home, we hope you get home safe and that you are ready to start a new year on January 1st. May your New Year be filled with prosperity, good health and great conversations with your insurance agent!
1: The Kemper PDF “Ride Sharing Advisory Notice. “