Mind the Gap
Coverage gap solutions for clients who drive for ridesharing services
The last thing you want to do is speak with a new prospect or client and assure them that you can properly address their ridesharing exposure—only to find out that you can’t.
After spending some time examining homeowners policy coverage gaps, we will now shift our focus to the personal auto policy. Specifically, we will address coverage gaps pertaining to ridesharing services (a.k.a. transportation networks) such as Uber and Lyft.
The issue
The ISO personal auto policy has an exclusion that prevents the policy from providing liability coverage when the insured is carrying people or property for a fee. While the exclusion language has changed over the years, the thought process behind it remains the same—these types of exposures should be covered under a commercial policy.
The PP 00 01 (01 05) version’s exclusion reads as follows:
EXCLUSIONS
- 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 or livery conveyance. This Exclusion (A.5.) does not apply to a share-the-expense car pool.
Seems simple enough, doesn’t it? Or does it?
Why it matters
Let’s suppose you have a new client who informs you that they occasionally work for a ridesharing service and have some concerns regarding their personal auto coverage. Specifically, what if they aren’t driving anyone yet but are on their way to pick someone up for a trip? Do you know if they will be covered for liability and/or physical damage to their car?
If they are like many drivers, they might assume that their personal auto policy fills in the gaps where Uber and Lyft leave off. This is a dangerous assumption to make. An increasing number of insurance companies are coming out with personal auto policy endorsements that clarify coverage restrictions for drivers engaged in ridesharing services.
In many cases, these endorsements are mandatory and are automatically added to new and renewal policies.
Following is the language from ISO endorsement PP 23 40 10 15. A number of insurance companies that don’t use ISO forms exclusively also are adopting similar language.
- Part A – Liability Coverage
Exclusion A.5. is replaced by the following:
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 or livery conveyance. This includes but is not limited to any period of time a vehicle is being used by any “insured” who is logged into a “transportation network platform” as a driver, whether or not a passenger is “occupying” the vehicle.
This exclusion (A.5.) does not apply to a share-the-expense car pool.
Similar language is in this endorsement for medical payments coverage, as well as physical damage coverage.
Therefore, if your client has a policy with this type of endorsement on it, you can clearly inform him or her that there is no insurance coverage while they are logged into a transportation network—even if a passenger isn’t in the vehicle.
Surely the ridesharing service will cover some of this exposure, right? Only to a limited extent.
Both Uber and Lyft provide $1,000,000 limits per accident once a driver accepts a ride request and is driving passengers around. They also offer $1,000,000 limits for uninsured/underinsured motorist liability, once the ride request is underway.
However, both have significantly reduced coverage when a driver is logged into the app but hasn’t accepted a ride request. Uber and Lyft offer bodily injury limits of $50,000 per person/$100,000 per accident for situations like this. In addition, both provide $25,000 of property damage liability for this scenario.
Your client should also be made aware that both companies provide $50,000 limits for comprehensive and collision—but only when passengers are in the vehicle.
Once you review this with your client, I think they will agree that we have some gaps that need to be addressed.
Possible solutions
Depending on the state where you are located and the companies you write for, you might be able to offer your client a solution to fill these gaps. Last year, ISO came out with two endorsements that specifically address the times when transportation network drivers are logged into an app but haven’t yet picked up a passenger.
The first of these endorsements is the PP 23 45 10 15. This form addresses the gaps by amending the A.5. exclusion in the personal auto policy that we noted at the start of this discussion. In short, it provides liability, medical payments, uninsured/underinsured motorists liability, and physical damage coverage when a driver has logged into a transportation network platform but has not yet accepted a ride request.
The only problem with this form is that it still leaves a gap during the time when a driver accepts a ridesharing request and when the passenger is picked up.
The second endorsement (PP 23 41 10 15) does a better job of resolving the situation. Like the PP 23 45 form, it provides coverage by modifying the A.5. exclusion. However, this version ends coverage when a passenger occupies the vehicle, which is precisely when the $1,000,000 limit of liability insurance from Uber and Lyft will go into effect.
Know your options
Again, not all insurance companies are offering these (or similar) endorse- ments, and those that do seem to offer them in a limited number of states. In some instances, companies are offer- ing commercial lines policies specifically designed for ridesharing exposures. In other cases, they are using endorsements to modify the public or livery conveyance exclusion that is found in their personal auto policy forms.
Premiums for this coverage also seem to vary greatly. I have seen quotes for this coverage range anywhere from $20 per year up to a 25% surcharge.
In summary
Check with your insurance carriers and find out specifically what they offer, as well as what they charge for it. The last thing you want to do is speak with a new prospect or client and assure them that you can properly address their ridesharing exposure—only to find out that you can’t.
Like any other new insurance coverage, it will take some time for insurance companies to figure out how to address this growing exposure. However, it appears that ridesharing services aren’t going away, so don’t be afraid to approach your carriers and ask them what they’re doing to address this exposure. In some cases, they might ask you for your feedback, so this is a great opportunity for you to help fill in some coverage gaps by working on behalf of your clients directly with your insurance carriers.
The author
Marc McNulty, CIC, CRM, is vice president of insurance operations at The Uhl Agency in Dayton, Ohio, and has been with the agency for 15 years. He divides his time among sales, marketing, technology and operational duties. Marc also serves as chairman of NetVU’s Young Professionals Chapter. You can reach Marc at marcmcnulty@uhlagency.com
