Two agents from the same insurance company gave TNC driver different answers on whether they could provide coverage. (Deborah Svoboda/KQED)
Two agents from the same insurance company gave TNC driver different answers on whether they could provide coverage. (Deborah Svoboda/KQED)

What happens if you want to go to work driving for a ride-service company like Sidecar or UberX and try to get insurance up front? What happens to your policy if your insurance company finds out you’re driving passengers for hire? Will your insurance pay your claim if you have a fender-bender while driving for a ride service?

I’d love to give you definitive, black-and-white answers to all those questions. But the truth is in a gray area. My reporting and stories done by others suggest insurance companies aren’t crazy about covering you if you’re driving for a ride service, though I did find one driver who said he had no problem with coverage or filing claims.

Josh Wolf, a Lyft driver, wrote about his experience trying to get insurance in the San Francisco Bay Guardian last summer. He related this anecdote:

(A)t least one person has been told by her insurance company that she will be dropped unless she obtains a notarized letter from Lyft saying she won’t be driving for it anymore. The trouble began for this driver, who spoke on condition of anonymity, when she got into a minor fender bender while driving a passenger in March.

“The guy whose car I bumped into was the neighbor of my passenger,” said the driver. “I never heard anything else from Geico for the longest time so I was sort of hoping that it didn’t have an effect on my coverage, but then at the end of June I got the questionnaire in the mail.”

A month later Geico told her that she’d be dropped from her insurance at the end of July unless she can demonstrate that she’s no longer driving for Lyft. Geico said that if she couldn’t get a letter from Lyft, she could send a notarized letter herself and the company “might take it under consideration.”

A spokesperson for the Insurance Information Network of California told Wolf that, “An insurer may even decide to non-renew your policy for failing to notify them of your business.”

Dan, a Lyft driver I talked to for this series, says, “I have heard about people being denied coverage because it was discovered they were driving for Lyft, and therefore their personal insurance policy would not be renewed, or canceled.”

I asked Kara Cross of the Personal Insurance Federation of California if this was happening — insurers canceling the policies of TNC drivers once they got wind of their shuttling people around for money. She said she hadn’t heard of any such incidents. And a Lyft driver I spoke to who got into an accident last year told us he had no problem renewing his personal insurance in August. “I think it depends on what agent you have,” he says.

But if you buy a new car and plan on using it to work as a ride-service driver, there may also be a problem with obtaining personal insurance for just everyday, non-commercial use. I called up the American Automobile Association and Allstate to see if they’d insure me for the personal use of my car if I also happened to use it for transporting paying passengers. Like, could they insure me and just exclude any incidents in which I was working for a TNC?

Nope.

“If they discover that your car’s being used that way, then that’s going to raise the red flag for any claim,” an Allstate broker told me. “Tracking if accidents have occurred involving such vehicles is difficult, as the insurer will not always have the knowledge that the passenger paid for transport.”

In other words: If you get into an accident, how’s your insurance company going to know if you were transporting a paid passenger or just on your way to the grocery store? (Though the pink mustache may be a dead giveaway. Per the new CPUC rules, all TNC drivers will have to install signage identifying them as a ride-service vehicle.)

Kara Cross says there’s potential ambiguity in these situations as well: “That’s one of the things that’s missing in the CPUC language. There’s no trigger point, really, as far as when coverage switches over when you’re in personal use as opposed to commercial use.”

Lyft driver Alice says when she called her insurance company and asked if they covered ride service vehicles, she was told yes several times before finally someone said no.

“It depends on the agent, quite frankly,” she says. She says another Lyft driver told her that one agent from an insurance company said it could offer her coverage, and another agent from the same company told her it didn’t.

All of these questions, TNC opponents claim, amount to incentives for people to keep their status as ride-sharing drivers secret from their insurance company. My conversations with drivers seem to confirm that.

“I don’t think I should let my insurance company know because I’ll probably get dropped,” one driver said. “I figure the less they know the better,” said another.

  • brothenberg

    Mission: Find out the carrier of Lyft’s $1mm amazing insurance policy.. Travis of Uber has.. it’s a mystery! http://storify.com/ripemp/on-demand-ridesharing-slap-fest.. and yes all these rides are NOT INSURED.. unless I tell them I am taking a buddy for no money.

  • maplecraig

    What insurance company would insure Lyft drivers like this? Not the warm fuzzy Lyft driver they promote in their ads?
    This driver assaulted a pedestrian in San Francisco for daring to take
    a picture of his car parked in a cross walk and a fire hydrant.

  • Mary Lee Hannington

    This really opens a can of worms. How many times have you given someone a ride and they gave you gas money or, at least when I was in college, given a ride to someone going to the same hometown that posted on a community board and offered to pay. Back when there was some environmental concern (laugh) there used to be ride share lots here in the Motown suburbs where you could park your car and share a ride downtown in order to cut down on pollution and save oil supplies.

    The only difference is people like Lyft are using the internet when in the past it wasn’t such a public process.

    • Dan Brekke

      No can of worms there. The California Public Utilities Commission specifically exempts this kind of impromptu, personal sharing from any kind of regulation. What distinguishes the TNCs, the CPUC says, is that they’re explicitly commercial enterprises (in addition to helping arrange rides, their software helps facilitate payments to drivers and the companies).

    • A G

      No, the difference is when you were collecting gas money, you were giving a rideshare to someone getting dropped off somewhere on your planned destination.

      These internet enabled car-for-hire companies are acting as dispatch services for peer to peer taxi cabs. There’s a big difference. Full time Lyft and UberX drivers are putting on 40K miles per year driving people around. That’s not ridesharing.

  • Dave Sutton

    Maybe the reason two agents for the same insurance company gave conflicting answers about whether their company would cover ridesharing drivers under a personal policy
    is simply that some are over-eager salesman. If they can at all swing it, the sales
    person will tell the shopper what he wants to hear. Or the sales people themselves are counting on the fact that the insurance company won’t find out their client is driving commercially.

    But when that driver goes to make a claim it will go to a different department. And if
    that department is aware that the private driver is acting in a commercial capacity, I bet the answer “no” becomes more uniform.

    So, it’s probably prudent for ridesharing drivers to hide their occupation from their insurance companies. But does omitting to inform their insurance companies they’re
    driving commercially AND THEN filing a claim constitute insurance fraud?

    • Tizzielish

      Legal fraud is rarely a prudent choice. Lying in contractual agreements — and car insurance is a contract — is legal fraud. Legal fraud is grounds for the insurance company to deny coverage. I am surprised this journalist did not do a tiny bit of research, like talking to one lawyer.

  • Tizzielish

    Hiding the commercial use of your personal car from your insurance company is legal fraud. Not only would the owner of such a car be at risk of being denied coverage for any and all claims, whether they be while carrying paying riders or while driving for personal use, the foundational legal contract could be declared null and void.

    So imagine being in a major car accident — with or without a passenger — and your insurance company gets wind that you are driving as a Lyft driver and didn’t tell them. . . people might not realize this but insurance companies don’t pay out big claims without doing some investigating. Duh. So imagine you are in an accident, someone is maimed to the tune of half a million bucks. Do you think your insurance co. is going to say “hey, she’s a good gal, we’ll pay out even tho she lied to us (withheld truths are fraudulent lies)” or do you think they will look for any reason to avoid the payout?

    You decide. Insurance is supposed to cover risk. Lying to your insurance company voids the insurance contract. And it is a contract, don’t kid yourself about that.

    I”m not saying there shouldn’t be a new insurance product that insures Lyft drivers — there should be. But lying, or withholding truths, is just stupid. And, as I already said, fraudulent.

    • A G

      You’re right. Not only is it a breach of your personal auto policy, a contract, but if you lie about ferrying around passengers for money for the purpose of getting insurance coverage for you, your car, your passengers or the other car and its passengers and are caught in that lie, that can be considered insurance fraud, a felony depending on your state laws.

Author

Jon Brooks

Jon Brooks writes mostly on film for KQED Arts. He is also an online editor and writer for KQED's daily news blog, News Fix. Jon is a playwright whose work has been produced in San Francisco, New York, Italy, and around the U.S.

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