Lyft and Uber App Drivers Face Insurance Issues

Most of us grumble about the costs associated with automobiles. While we certainly appreciate the convenience and freedom they provide, the fact that a car can cost you tens of thousands of dollars to purchase, not to mention thousands of dollars each year to drive and maintain thanks to the high price of fuel, registration, maintenance and repairs, and insurance, is enough to make you seriously consider scrapping the car altogether and opting for mass transit. But what if you could make some money on your daily commute by taking other people to their destinations along the way? What if you could sign up to take fares any time it’s convenient for you, with no obligation to offer rides if you’re too busy or you simply don’t feel like it? With ride sharing applications like Uber and Lyft for mobile devices, you can do exactly that, picking up fares in your area, dropping them off, and earning some extra cash in the process. But before you get too excited about the idea, you might want to ask yourself what happens in the event of an accident.

You no doubt carry personal automotive insurance. Maybe you have a liability or collision policy, perhaps you’ve gone with comprehensive coverage, or you might even opt for full coverage (especially if you’re still paying a car loan). Unfortunately, none of these standard policies are designed to cover commercial operations, which is precisely what you’ll have on your hands if you get paid for picking up and dropping off fares. Now, you might argue that ride sharing is not a business. But this is only true if you’re driving people around out of pure altruism and receiving not payment. Even Lyft and others (like Sidecar) have had to concede that so-called “donations” from drivers are actually payments, and they’ve started referring to them as such. But what does this mean for you and your ability to participate in these services for some easy extra income?

The main thing it means is that your personal insurance policy is moot. Sure it will cover you in the event of an accident under normal circumstances, but if they find out you’ve been in an accident while you were being paid to drive, you’ll not only be denied coverage; you may also find yourself without any insurance at all. Several drivers in such circumstances have discovered the perils of misrepresenting their automobile usage to their insurance providers. And even though Uber, Lyft, and other such companies carry million-dollar policies, they almost certainly won’t cover you or your vehicle in the event of a collision, even if you’re on the clock. They’re meant to protect customers, not drivers.

There’s only one legal course of action open to you if you want to keep getting paid for ride sharing through apps like Lyft and Uber: you’re going to have to pay for commercial auto insurance just like any cabbie or limo driver. And when you compare California auto insurance quotes for commercial operation, what you’re likely to find is that it is several times more expensive than what you currently pay, potentially eating up any profits you might make with your side job as a driver for hire. Eventually, insurance providers will come up with some kind of solution. But in the meantime you’re likely to get kicked to the curb if you fail to tell your insurer that you’re using your car to turn a profit and they find out only when you’ve had an accident.

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