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How will driving for a ride-sharing service affect my auto insurance?

In today's tech-savvy world, it may seem as though the smartphone dictates society's every move--even when it comes to figuring out how to get from point A to point B. Mobile apps like Uber, Lyft, and Sidecar allow users to arrange car rides on the fly with the touch of a few buttons. This method of transportation, dubbed ride-sharing, is becoming increasingly popular across the country. It's an easy way for drivers to earn extra income as well as for passengers to get where they need to be on short notice.

When it comes to ride-sharing, insurance is a particularly tricky subject, mainly because a personal auto policy typically excludes transportation of passengers for a fee. As a result, auto insurers are struggling with how to underwrite risk for drivers who have their own auto insurance and use their private vehicles to transport paying passengers.

For this reason, the major ride-sharing services provide commercial insurance policies that cover property damage and liability; however, the amount and types of coverage may vary among companies. Often, coverage may be "primary" to a personal policy only when a paying passenger is in the car, or while the driver is in transit between trips. Make sure you know the answers to the following questions before you become a freelance driver for hire:

  • What does your personal auto policy cover? What does it not cover?
  • What types and amounts of coverage are offered by the ride-sharing service's commercial policy?
  • When does your personal auto policy stop and when does the ride-sharing service's commercial policy begin?
  • Are there coverage gaps between your personal auto policy and the ride-sharing service's auto policy?

As the popularity of ride-sharing services continues to increase, a few insurance companies have started to offer specialized ride-sharing coverage for drivers' personal policies, although this is not available in every state. Your insurance professional may be able to provide you with the latest and most pertinent information about the coverage you'll need.

IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.