Will my auto insurance premiums go up if I do some work through a ridesharing service?

Q:

Will my auto insurance premiums go up if I do some work through a ridesharing service?

A:

The short answer is yes. If you're driving passengers for payment – even if only part-time and through a ridesharing service – you will need a different type of insurance. The bad news is that this insurance will likely be significantly more expensive than the personal insurance policy you had before.

Aside from claims history, one of the biggest factors that affect your auto insurance premiums is your rate class. Basically, that's the purpose for which you're using the vehicle. The details varies by jurisdiction, but there are four general rate classes you can fall into:

  • Pleasure use (e.g. running errands)
  • Commuting (driving to and from work)
  • Business use
  • Delivery use

As you can imagine, if you're using the vehicle more often, driving longer distances, or carrying precious or dangerous cargo, your risk profile skyrockets and the insurance company will need to charge you a higher premium to compensate.

If you are carrying passengers for compensation, you will likely fall into a sub-class of business use called the taxi or limousine rate class, which is significantly more expensive than a normal pleasure use of commuter rate class.

Despite this added cost, it is important that you purchase the right insurance for your usage. Having the wrong type of insurance could invalidate your coverage resulting in some very serious financial consequences if you are involved in an accident. Your claim would likely be denied and you would be left fully responsible for repayment.

So, if you're ferrying passengers as a side hustle or your main source of income, you'll have to upgrade your insurance. The jump in premium will sting, but it's nothing compared to the mess you can get into if you don't have the right kind of insurance.

(Want to learn more? Check out Making Money Through a Ridesharing Service? Here's What You Need to Know About Your Insurance.)

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Written by Jacques Wong
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Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won an Insurance Council of BC award in 2015 for academic excellence in the insurance licensing courses and educates insurance professionals through PNC Learning.   Full Bio