Do I need special insurance if I make money through ridesharing?
This is a question I'm starting to get more frequently, so it's good to be able to write about it.
With the advent of ridesharing services like Uber and Lyft, more and more people are looking to it as a way to generate some extra income out of their personal passenger vehicles. This shift in the usage and purpose of the vehicle brings along some changes in the driver's insurance needs as well.
In the old paradigm, most people's vehicles fell neatly into two general categories. Either their vehicles were for personal pleasure use (like driving to the gym or grocery store) or business use (such as a contractor using a pickup truck to carry their tools to the job site or a taxi ferrying passengers for a fee). With this black and white distinction, your insurance needs were straightforward. Depending on which category your vehicle fell under, you would either purchase personal auto insurance or commercial auto insurance.
Ridesharing services have made this a bit trickier. People who make money through one of these platforms tend to have a vehicle that is mostly for personal use but is occasionally used to ferry passengers for a fee.
If you have a vehicle with that kind of hybrid use, what kind of insurance should you buy? The conventional wisdom says to buy business use insurance similar to what a taxi driver would need. But that type of insurance is usually prohibitively expensive, especially for someone who is only carrying passengers part-time. But if you settle for a personal auto policy, you'll have the wrong coverage and risk large financial losses.
Luckily, insurance companies are responding quickly by offering new products that might be a better fit. These can be add-ons to your existing personal policy that will cover you for part-time business use of your vehicle (if you start ridesharing full time, look into more traditional commercial insurance). Some ridesharing companies have also partnered with insurers to offer insurance tailored to their drivers' needs. But don't just assume that the rideshare company provides the best option. Compare their coverage with what's available through your auto insurer.
In summary, yes you should be purchasing special insurance if you are making money through a ridesharing platform. If you have no tailor-made options available to you, talk to your agent or broker about getting your vehicle insured for business use (for more, see Making Money Through a Ridesharing Service? Here's What You Need to Know About Your Insurance).
Written by Jacques Wong
Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.
In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.
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