Insurance regulators have struggled to address the insurance coverage gap troubling employees of ridesharing services like Uber, Lyft and Sidecar, as city and state policymakers grapple with conflicting laws and opinions on what constitutes full coverage.
In a newly adopted white paper, The National Association of Insurance Commissioners outlines several suggestions for state lawmakers on how to handle insurance issues surrounding what it calls “transportation network companies.”
At the heart of the issue is ridesharing drivers who “use personal cars for that commercial activity but do not have commercial auto insurance.” If a driver were to get into an accident while logged into the ridesharing app—but before being matched with a passenger—there is dispute over whether the personal or commercial insurance policy should apply.
Personal insurance generally does not cover such policies, and some insurers have expressed the opinion that using a covered car for pay is grounds for cancellation at any time. Commercial insurance has proven to be prohibitively expensive for many drivers, however, typically costing between $5,000 and $7,000 a year.
“This is an area where insurance regulators and state legislators in each state can work together to make sure that consumers protected,” said California Insurance Commissioner Dave Jones, who chairs the NAIC Sharing Economy Working Group.
The NAIC believes the best approach to solving this coverage gap is requiring ridesharing drivers to have coverage on a full-time basis for all ridesharing activity. To achieve that, the paper recommends regulators either require the driver to purchase commercial coverage or require the ridesharing company to provide full coverage for all periods of the ridesharing process.
This would likely require ridesharing companies to change their business models. It also supports the development of some hybrid insurance products being developed by some carriers to address the coverage gap.
Already, USAA has started a pilot program offering specialized coverage for ridesharing drivers for an additional $6 to $8 a month.
GEICO is also offering a ridesharing policy in Maryland and Virginia, while
MetLife is offering a policy for Lyft drivers in Colorado.
These new offerings are encouraging, but may present a few problems for regulators, the NAIC paper said.
“These hybrid insurance products, adding some level of coverage for TNC activities onto PAPs, are being developed as this paper is being written,” the NAIC said. “They are being introduced by innovative insurers willing to take on the calculated risk and be the first to gain market share in an evolving and growing space.
“Because the products are not being standardized but are being developed by different insurers, they will likely establish coverage via different methods for different time periods. The new products present many concerns for insurance regulators, including, but not limited to, the cost for the new hybrid coverage.”
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