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How Ride Share Insurance Works

Most of you have heard of Uber and Lyft. Technically, these are transportation network companies, but more commonly there’re referred to as ridesharing companies. Both use online links or smartphone apps to connect passengers with drivers using their personal vehicles as an alternative to taxis.

Around the country, ridesharing has been growing at an impressive clip as drivers embrace the chance to earn added income by hauling strangers around. Unfortunately, the insurance industry has been reluctant to provide liability coverage for people wanting to turn their private autos into part-time taxis.

The Coverage Gap

As car accident lawyers we’re aware of this situation, and it boils down to this: when a driver working for a rideshare company is off duty and not logged into their rideshare app, they’re covered by their personal auto liability insurance. Later, when they’ve accepted a ride request, they’re picking up a passenger or driving with a passenger, they may be covered by the company’s liability insurance.

But what about the gap in between, when you’re logged into your rideshare app, you’re available for a fare but don’t yet have a passenger? That’s the gray area where there’s been a problem for rideshare drivers.

Unfortunately for rideshare drivers, every personal auto insurance policy ever written excludes coverage if the driver is engaged in commercial activities such as delivering pizza or, now, acting as a part-time taxi. Of course, there’s always the option of purchasing a commercial policy, but these can easily cost thousands of dollars a year, eating into the rideshare driver’s extra income.

This gray area situation has led to a lot of lies to insurance companies by rideshare drivers, but even if an insurer decided to cover a rideshare claim, the driver often received a cancellation notice in the mail shortly afterward.

Rideshare Coverage

Fortunately for rideshare drivers in Illinois, a number of insurance companies are now offering rideshare insurance. These new policies provide liability coverage for that gray area when a driver is logged in but has not yet picked up a passenger.

As welcome as that coverage is, there is still ample room for liability disputes. If you are involved in a liability dispute, Shea Law Group’s car accident lawyers in Chicago IL urge you to email or call us for your free, no-obligation initial consultation. Let us see how we can help you.