Leaked documents from Geico—the second largest insurer in the U.S.—offer some very clear language explaining why Uber and Lyft drivers will want to look for car insurance from another carrier. One section of the internal sales-training document, which was first obtained by the San Francisco Chronicle, reads “Please Group Reject the policy” of customers involved in “ridesharing.” Another section contains a script for salespeople to use when informing customers that their policy does not cover vehicles used for ride-sharing services and that customers can look elsewhere for coverage or go so far as to prove they do not work as an Uber or Lyft driver.
We wrote in June that the insurance industry was trying to force the government into regulating Uber and Lyft. One such measure was a bill passed in California this fall that goes into effect in the summer of 2015. It “require[s] taxi-like primary insurance and protect[s] drivers against lawsuits for loss or injury when providing [transportation network company] services.” That puts the burden on the companies, but still leaves a driver who uses their Uber or Lyft car as their personal vehicle out of luck. The big three insurance companies are not only not covering the time when a driver is on duty, they are outright dropping the personal policies of customers who drive for a ride-sharing service.
“Private passenger auto policy isn’t intended to cover livery services,” said Nicole Mahrt Ganley, a spokeswoman for the Property Casualty Insurers Association of America, told the San Francisco Chronicle. “There is little question that engaging in livery services is a material change in the nature of the risk being insured, and most states would allow companies to cancel coverage in those situations.”
According to drivers, Geico and other insurers sent out questionnaires to customers whose policies had lapsed asking if they were drove for any on-demand car services with their vehicle. According to the San Francisco Chronicle, one such driver signed up with another insurer rather than lie on the form and risk committing fraud. Multiple drivers on online forums who answered truthfully—naively in one driver’s mind—were promptly dropped from their insurance company after returning questionnaires. Both State Farm and Allstate, the number one and number three insurers, do not cover livery drivers.
Many states are trying to work with the insurers to develop new products for consumers who are drivers for a ride-sharing service. One such product would ideally fix a gray area of being one of these drivers: Uber famously has $1 million insurance policies, but those do not take effect until a driver has been paired with a paying customer. The company does technically insure drivers who are searching for or en route to picking up a customer, but the amount of insurance provided in those occasions is much lower.
Read more, including the the complete leaked document, here.