RISK EXPOSURE
RIDE-HAILING DRIVERS:
Check Your
Risk Exposure
I
t’s no secret that Transportation
Network Companies (TNCs)—most
notably Uber and Lyft—have taken
the world by storm over the past
five years. They have introduced
a whole new category of convenient
transportation, easing the burden of folks
that don’t own cars or don’t reside near
public transportation. For many of these
customers, abundant new housing and
employment possibilities have become
available as a result.
The concept of TNCs is simple: capitalize
on the ubiquity and low cost of the internet
to connect vehicle owners who have extra
capacity with those needing immediate one-
time rides. With each of the millions of rides
that TNCs provide every day, both providers
and customers accomplish an efficient yet
valuable transaction that benefits both sides.
But what happens to the equation when
insurance coverage is factored in? Do the
TNCs bear the liability for accidents and
other incidents, or do drivers need to seek
out special coverage? The answer is not
straightforward and is not “one-size-fits-all.”
As an initial step, however, it makes sense
for individuals seeking employment with
these companies to ask questions about
coverage and make exposure decisions that
fit the level of risk they are comfortable
assuming.
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There are generally three distinct periods to
consider with regard to coverage. The first is
when the app is turned on and the driver is
waiting for a ride request, which is relatively
low risk. The second, a riskier step, takes
effect when the ride request is received and
accepted but TNC customers are not yet in
the vehicle. The third, which involves the
highest portion of risk, begins once the rider
has entered the vehicle.
Personal automobile policies are designed
to cover only the personal use of a private
passenger vehicle—not its commercial
or business use. They typically include a
“livery exclusion,” which applies to vehicles
used to transport one or more persons
for compensation. Since TNC drivers
are doing exactly that, the “use” clearly is
more commercial than personal, which
creates a new exposure. As many of these
drivers have found out the hard way, a
personal automobile policy may not provide
the critical coverage they need in these
situations.
While the largest TNCs have policies in
place to cover drivers during periods two
and three, there is no clear approach on
coverage for the first period, although there
has been no shortage of discussion within
the insurance community. Prospective or
current TNC drivers should review a copy
of their TNC’s insurance contract as well as
contact their own auto insurer to address
any gaps in coverage.
Insurance carriers are working to find ways
to properly underwrite all of the risks for
TNC drivers who are using their personal
auto on a for-hire basis. But at least for the
present, it’s wise to investigate the risks for
yourself and make sure you are properly
insured. +
BY: SHARILYN TANAKA
ATLAS INSURANCE AGENCY
Sharilyn Tanaka is Vice President of
Personal Lines and has worked on a
variety of projects across many Atlas
departments, allowing her to develop
a multifaceted approach to servicing
clients. She joined Atlas a decade ago
as a Personal Lines Account Manager
and now currently oversees the sales
and servicing of all Personal Lines client
accounts.