Ridesharing: What You Need To Know

There is a smart phone application for almost everything now; adjusting your thermostat when you’re not home, recording your daily run and keeping track of your personal finances. Transportation apps such as Uber and Lyft that allow you to request a ride using your smartphone are becoming increasingly popular—and also controversial.

Considered a type of ridesharing, a company that uses an online-based platform to connect passengers and drivers for transportation services (using the driver’s personal vehicle) is now commonly called a transportation network company, or TNC. The Michigan House Committee on Energy and Technology approved legislation that would regulate TNC’s like Uber and Lyft. The bill now moves to the House floor for consideration.

For now, things to consider if you’re contemplating a part-time gig driving for a TNC:  Insurance, well you have insurance and the TNC provides contingent liability coverage when you are driving for them, you think you’re all set, right? Not so fast, the insurance you have is likely a personal automobile policy; however a personal auto policy has exclusions and limitations like, “We do not provide liability coverage for any insured for that insured’s liability arising out of the ownership or operation of a vehicle while it is being used as a public livery or conveyance.” (Or in simple terms charging a fee for the transportation of passengers or operating as a taxi voids your liability coverage.) You are no longer using your vehicle as a personal auto, you are making money from it, therefore turning it into a business. You need to contact your Insurance Agent and see what options are available to you; either endorsing your auto policy to include business use or apply for a commercial auto policy. You can choose to do nothing, but keep in mind that if a claim arises, you may be named personally in a lawsuit and there is a chance that your personal auto policy may not protect you or defend you and your assets.

So why gamble with your liability (this is the coverage that protects your home and other valuable assets from being taken away from you and given to the injured party)? Is it really worth it? If you think this can’t possibly happen to you, than ask yourself why “caution hot” printed on every disposable coffee cup?