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Transportation Network Companies

Consumer Alert: Auto Insurance Questions Uber and Lyft Drivers Should Ask

With the fast growing popularity of Transportation Network Companies (TNCs) such as Uber and Lyft, the auto insurance market is changing to make accommodations for drivers. Most private auto insurance policies do not cover you when you are transporting someone else for pay – known as a “livery exclusion” by insurance professionals.
In Pennsylvania the Public Utility Commission has established rules for Uber and Lyft under two-year experimental licenses. The PUC defines four stages of TNC activity:
  • Stage 0: When the driver is driving for personal reasons and the app is not active;
  • Stage 1: When the driver opens the app and is logged in and looking for customers;
  • Stage 2: When the driver receives and accepts a ride request and is traveling to pick up the passenger;
  • Stage 3: When the driver is transporting the passenger until the passenger exits the vehicle at their final destination.
These licenses require the companies to provide some insurance coverage for drivers at certain points while a contractor (these companies classify drivers as contractors not employees) is transporting customers. There may still be gaps in your personal auto insurance coverage.

Here are important questions you should ask your auto insurance company if you are thinking about driving for Uber or Lyft:

  • Does my policy exclude coverage while driving for a TNC?
  • If my policy does cover me while driving for a TNC, what coverage is provided under these circumstances?
While the PUC requires TNCs to provide commercial coverage once the driver has turned the app on and begins looking through passengers through when a passenger is discharged, this coverage may not be all you need.

Here are important questions to asK the TNC before you start to drive for them:

  • What are my responsibilities and who should I contact in the event of an accident during Stages 1, 2, or 3?
  • Does the TNC commercial policy provide comprehensive and collision coverage or just liability coverage in case someone is injured?
  • What are the coverage limits in the commercial policy?
  • What are the deductibles in the commercial policy, and who pays these deductibles?
Coverage limits for comprehensive and collision coverage may have significantly different limits and deductibles from your private policy. Make sure you know the details of the commercial policy and who is responsible for bearing the additional costs.

If you have a car loan, you should also reach out to your lender and ask:

  • Does the TNC’s commercial policy comply with your insurance requirements for my loan?
  • If the commercial policy does not comply, will I be put into “force-placed insurance?” This policy allows the lender to protect its interests in the automobile.
  • If so, how much will this cost?
For more information on Transportation Network Companies, read our recent press release.