How Ridesharing is Impacting the Insurance Industry

Companies such as Uber and Lyft are touted as harbingers of the future, where a gig economy is expected to prevail. Companies like these could also have a big impact on the insurance industry because of the insurance requirements for ridesharing.

Currently, few rideshare drivers have rideshare insurance. Recent surveys have shown that little more than 20 percent of all rideshare drivers have the required insurance. That is, they have not bought coverage in addition to what the company provides. But nearly half of those surveyed said they are planning to buy the additional coverage within the next several months.

Uber alone is estimated to have about 400,000 drivers around the world, so there are several hundred thousand Uber drivers without rideshare insurance.

Buying such insurance, however, is not a straightforward affair because drivers for these rideshare companies are considered independent contractors. Their vehicles are used both for personal driving as well as for business. That puts them in somewhat of a gray area when it comes to insurance.

Personal insurance provides no protection for the driver if the vehicle is being used for business purposes, but commercial insurance provides coverage only for vehicles that are used exclusively for business purposes.

The rideshare companies do provide some level of insurance for their drivers, and insurance companies are moving to create policies that cover hybrid users such as Uber drivers. Rideshare companies claim that the supplemental coverage they provide is enough for drivers who have a personal insurance policy, but many insurance companies disagree.

Rideshare services consider drivers as independent contractors and not employees. If you are a rideshare driver, it’s a good idea to review your insurance coverage because of the added risk involved.

The bottom line for insurance companies is this represents a major new market for coverage. Agents need to educate themselves on the rideshare policies, determining where the gaps in coverage are, and what is offered in your particular state, since insurance is different for each state.  

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