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What Does Ride-Sharing Insurance Cover?

Published: February 2017

If you drive for a ride-share company, you might already be aware that a personal auto insurance policy typically does not cover "business use" of your vehicle. In other words, if you're in a car accident while you're on the clock, you could end up paying out of pocket for expenses such as vehicle repairs or medical bills.

So, if you use your vehicle for both personal and business purposes, you might want to consider additional coverage to help protect it. Here's a primer on ride-sharing insurance, and the types of scenarios it may help cover.

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Ride-Sharing Insurance Options

Some insurers offer a ride-hailing insurance endorsement you can add to your existing personal car insurance policy. If you drive for a ride-sharing company (sometimes called a transportation network company, or TNC), the extra coverage offered by this endorsement may help fill gaps between the TNC's commercial policy and your personal auto insurance policy.

Another option may be a full ride-sharing insurance policy, which combines both personal and business coverage into one auto policy.

Insurance premiums, coverage types and policy limits may differ among insurers and the available coverage will also vary by state.

Ride-Hailing Coverage Gap: Business Use vs. Personal Use

According to the National Association of Insurance Commissioners (NAIC), the major TNCs provide limited commercial insurance for business use of an employee's vehicle. Business use may include times when the driver is en route to pick up a passenger or has a passenger in the vehicle.

But, since personal car insurance excludes all business use, the driver may not be covered by either policy when he is available for hire but has not yet accepted a ride request, the NAIC says. A ride-sharing endorsement may help fill that coverage gap. It extends certain coverages on your personal policy so that they apply during the "app on" period when you're waiting for a ride request.

So, if an accident occurs while you're waiting to be hired, the ride-sharing endorsement may help prevent you from paying out of pocket for related expenses. Keep in mind, however, that if you didn't have collision coverage on your personal policy, you would not have it under the endorsement, either. Then, you would still have to pay for the full cost of repairs to your own vehicle.

TNC Coverage: Deductible Gap

A ride-sharing endorsement may also help reduce your out-of-pocket expenses when it comes to paying a TNC policy's high deductible. Though some TNCs provide commercial insurance for drivers, if you get into an accident while driving for the company, you'll likely have to pay the TNC policy's deductible.

As a refresher, a deductible is what you pay out of pocket toward a covered claim. Collision coverage and comprehensive coverage each have separate deductibles. On a personal auto insurance policy, you may be able to select your collision and comprehensive deductibles, for example $500 each.

On the other hand, when you drive for a TNC under the protection of its commercial insurance policy, you may have to pay higher deductibles for collision and comprehensive coverage — for example, $1,000 or $2,500. If you're involved in a covered collision while you're en route to pick up a passenger or have a passenger in the vehicle, you'd have to pay the TNC's deductible out of pocket before commercial insurance benefits kick in to help repair your car.

A ride-sharing insurance endorsement may help cover the gap between your personal auto policy's deductible and the TNC policy's deductible in this type of scenario. So, if your collision coverage deductible is $500, and the TNC's collision coverage deductible is $1,000, the ride-sharing endorsement may help pay the $500 difference.

Some insurers also offer a full ride-sharing insurance policy, which combines both personal and business coverage into one auto policy. Insurance premiums, coverage types and policy limits may differ between insurers, says the NAIC, and the available coverage will also vary by state.

If you're thinking of becoming a ride-share driver, the Insurance Information Institute (III) suggests that you discuss with your TNC its coverage types, limits and deductibles.

Once you know what coverage may be available through your ride-hailing company, you can talk to your agent about filling in any potential coverage gaps with a ride-hailing endorsement on your personal auto insurance policy.

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This content is for informational purposes only and may not be applicable to all situations.

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