Many trends in car insurance take years or decades to go from an idea to a reality, and the course of those trends is easy to plan for. More recently, however, there have been some seismic shifts in trends that have taken the industry by storm and left everyone scrambling to find solutions to problems we didn’t have even 3 years ago.
Ride share services such as Uber or Lyft are one of those trends. These companies were created out of the concept of crowd sharing, with a big helping of mobile technology, and a dash of the new entrepreneur, and they were a huge hit literally overnight. The concept of being able to log on and find a ride in a regular car for a reasonable price was almost as attractive as the ability to spend an evening or two a week driving around meeting new people with that same app and driving them places to make a little extra cash.
The downside of course was that giving someone a ride in exchange for money is a commercial use and what’s known as a livery risk, which essentially meant that there was not insurance coverage for anyone who was driving or riding in one of these services. Here in Minnesota, a team from Farmers Insurance met with state legislators to work out a plan for managing this risk, starting with a requirement that the ride share companies carry a commercial livery policy that they extend to all their drivers and passengers for the time that they have someone in the car. This provided liability protection, personal injury protection, and vehicle damage protection, which was an outstanding solution that thankfully came through before a significant tragedy struck.
That left a coverage gap; however, for the drivers anytime they have the app on, but don’t have a fare in the car. This was left up to the individual insurers to manage or choose not to get involved in. At this point, only a couple of companies are offering an endorsement on a personal auto policy that allows you to be covered while driving for a ride share service. Many companies have chosen not to get involved and others require even casual ride share drivers to get a commercial policy.
As with all auto insurance, the greatest risk here is liability and how many of your assets are protected in the event you are held liable for an injury, accident, or fatality. With the new laws on the books here in Minnesota and the insurance companies offering a ride share endorsement, this revolution in crowd sourced transportation is finally a safe and affordable way to get a ride or make a few extra bucks.
This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on this topic and more and how Aaron can help protect your business, email him at anicklay@farmersagent.com or call (952) 229-5155.
