Introduction to the Issue

Each year, drivers are required to report their car's mileage. For those engaging in delivery driving, there can be significant changes to their auto insurance premium. In one instance, the premium essentially doubled due to an increase in mileage. This article explores the relationship between auto insurance premiums and engaging in ride-sharing or delivery driving.

The Impact on Auto Insurance Premiums

Insurers understand that delivering goods or picking up passengers involves an elevated risk compared to personal use. Insurance companies typically charge a higher premium when drivers use their vehicles for Uber, Lyft, or other ride-sharing platforms. This is because these activities introduce commercial risk—a risk that exceeds that of personal use.

Insurers may provide coverage for ride-share drivers under special conditions. However, it is vital for drivers to inform their insurance companies about their activities. Omitting this information can lead to inadequate coverage and financial ruin in the event of an accident.

Commercial vs. Private Risk

A personal auto policy is designed for private use, not commercial activities such as taxi services. Public transportation like taxis and buses pose significantly more risk to insurers than private vehicles for personal use. Therefore, separate insurance policies are often required for commercial activities, especially when a vehicle is used for ride-sharing services.

The Role of Ride-Sharing Companies

Ride-sharing companies like Uber and Lyft have recognized the need to protect their drivers. To that end, most have placed exclusions in personal auto insurance policies for drivers in these industries. Essentially, when drivers are on the clock, their personal auto insurance is not in effect.

Uber’s Insurance Coverage

Uber offers limited but valuable protection for its drivers. If a driver is waiting to find a rider, coverage limits are set at 50,000/100,000/25,000. However, once a rider is picked up, these limits soar to 1,000,000 in auto liability coverage. Additionally, uninsured/underinsured motorist coverage and Actual Cash Value including depreciation, collision, and comprehensive coverage for the vehicle are provided. These limits come with a 1000-dollar deductible.

Lyft’s Insurance Coverage

Lyft's arrangement is similar to Uber's, with the primary difference being that both are collectable only in excess of any coverage provided by the drivers' personal auto insurance. This means that the primary insurance must first contribute, and the secondary ride-share insurance will then cover the remainder.

The Importance of Comprehensive Insurance

Many drivers are pushed to purchase "Rideshare Insurance Policies" from companies like Geico. These policies aim to fill the coverage gaps between the drivers' personal auto insurance and the coverage provided by ride-sharing companies. By doing so, drivers ensure they are fully protected when engaging in ride-share activities.

Conclusion

The relationship between auto insurance premiums and ride-sharing or delivery driving is a complex one. Drivers must inform their insurance companies of their activities and ensure they have the right insurance in place to avoid financial disaster.