UberX, Lyft, and Sidecar and the Personal Auto Insurance Policy

Here in Massachusetts, insurance companies have started adding a specific exclusion to the personal auto policy to exclude this activity from coverage. Operators of these services need to purchase livery insurance and possibly workers compensation to correctly cover their commercial activity. The insurance companies are not dumb. When there is a claim how hard is it for their special investigative unit to find out if a vehicle is registered with one of these services?

There has to be some regulation and more accountabilty for these services. While the driver may have insurance, his or her policy may or may not provide all the coverage needed should an accident occur. Personal auto polices don't apply when someone uses their vehicle for commercial services such as aceepting fares for giving people rides. A personal auto insurace policy is not intended to cover people who are using their cars for commercial purposes.

States are rapdly issuing advisories concerning these coverage gaps in ride sharing services for drivers that only have personal auto policies. On May 6, 2014, Connecticutt became the first New England state to issue an advisory:

"The Connecticut Insurance Department has offered the following consumer advisory regarding ride-sharing arrangements known as Transportation Network Companies (TNC):

Drivers who work for transportation network companies (TNC) may not be covered by their personal automobile insurance policies while driving for hire. This is due to a common exclusion in most personal auto policies for claims arising while driving for hire, a practice sometimes referred to as livery service.
TNCs have grown in popularity because of technological advances that use online apps and other cyber platforms to connect paying passengers and drivers who use their personal vehicles to provide transportation.
Drivers of TNCs should be aware that while every personal automobile insurance policy differs, nearly all contain exclusions for livery. If a policy contains a livery exclusion, this means that the policy generally will not provide coverage for liability incurred while driving passengers in exchange for remuneration, other than an expense-sharing arrangement, such as a carpool.
The Department advises drivers to carefully read their policy to determine specific exclusions and to contact a broker or agent to discuss their insurance needs when driving for a TNC."


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