Ride-sharing companies like Lyft, UberX and Sidecar have come increasingly under fire from states and local municipalities regarding their drivers’ insurance policies. Most drivers operate under their personal policy until a passenger enters the vehicle, potentially leaving them exposed to accidents that occur while the driver has not yet picked up a passenger but are available for hire.
San Francisco-based Uber took the first steps to address that crucial “insurance gap” Friday, announcing a new insurance policy that covers the gap between personal and commercial policies. Uber also said it is working with insurance carriers to develop products that more fully cover its drivers.
“There has been much written about an ‘insurance gap’ during the time that ridesharing drivers are not providing transportation services for hire, but have the Uber app open and are available to receive a trip request,” the Uber blog stated.
Uber said the new policy will provide contingent coverage for driver liability at the highest requirement of any US state: $50,000 per individual per incident for bodily injury, $100,000 total per incident for bodily injury and $25,000 for property damage.
The policy will take over once a driver’s personal policy is no longer in effect. In other words, once the driver has turned on the Uber app, but before drivers are en route to make a pickup and have passengers in their car.
At that point, Uber’s $1 million commercial policy will take over.
The announcement follows major industry associations weighing in on the insurance gap, including the American Insurance Association, which stressed that ride-sharing companies like Uber ought to be regulated in the same manner as other “for hire” auto services.
“Private passenger automobile insurance does not cover for hire services,” said Stephen Schneider, Midwest region vice president for the AIA. “Covering commercial enterprises is simply not the function of this private passenger automobile insurance.”
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