Insurance for Uber and Lyft Drivers:
As companies like Uber and Lyft continue to expand, insurance companies and insurance regulators are trying to offer products and design regulation that address some of the coverage “gap” issues currently facing the companies and their drivers. A growing group of insurance companies have started to fill the coverage gap by offering “hybrid” insurance products that bring more commercial type coverage into the personal policy.
The last thing a driver or passenger wants to find out is that there is no insurance coverage in the event of an accident. I anticipate Uber and Lyft to start mandating these new hybrid policies as part of getting referred business. Insurance.com has also written about this topic. The term “usage-based insurance” is becoming increasingly popular, so it’s important to understand that not all usage-based programs are the same.
We have a list of companies now offering ride-sharing products. The following insurers:
- Erie Insurance
- State Farm
- Mercury Insurance
Unfortunately, there are some limitations to the existing group of products. An example is that regulations vary on a state to state basis. Insurers are likely to push these products into new states, which should help more drivers fill gaps in their coverage and increase the growth opportunity for insurers.
There are many factors that can affect your car insurance premium, such as driving history, the model of your car or your geographic location. Those are the old ways to predict the probability of an accident. Many insurance companies have determined driving behavior to be one of the most important indicators since a driver who frequently slams the brakes is likely at a higher risk to be involved in an accident.
It’s also worth mentioning that with the increased coverage, comes increased cost which considering the increase exposure is greater than conventional personal auto policies More and more insurance companies are better able to track miles driven for the rideshare company vs. miles for personal use, the price of rideshare coverage is likely to decline. So this space will evolve as time goes on and the ability to capture real time data with new technology advances insurance companies ability to predict accidents.