The Dangers of Uber and Other Ride-Sharing Apps
Uber, Lyft and other ride-sharing services can make it easy to get a quick car ride or make some extra income, and they’re only becoming more popular. In fact, in the cities where these platforms are available, taxi ridership has declined anywhere from 10 to 30 percent. However, the convenience of ride-sharing isn’t without risks. Most ride-sharing businesses are in the early stages of development, and the popularity, risk management and compliance issues they’re facing are all in uncharted territory.
How the Apps Work
Each ride-sharing service has its differences, but they all operate under the same basic concept. Almost anyone can be a driver for these services, but each one has different minimum standards for screening drivers and their vehicles. Passengers can then see available drivers and make a request for a ride through an app on their smartphones.
Most apps display the driver’s route and estimated time of arrival, in addition to the driver’s name, photo and vehicle information. The ride-sharing service then takes a cut of the fare, typically between 20 to 25 percent, for each ride a driver completes.
When Insurance Kicks In
Since ride-sharing drivers use their vehicles for both business and personal purposes, the ride-sharing services have to clarify when drivers are covered by different types of insurance.
When a driver is not accepting rides, his or her personal auto insurance is the primary coverage.. When the driver turns the app on, but has not yet accepted a ride, ride-sharing services generally offer contingent liability coverage if the driver’s personal auto insurance does not offer protection as this would typically be excluded under the PAP due to it being a public livery exposure while “trolling” for fares. When a passenger is picked up, the service’s policy is the primary policy until the end of the ride.
Some insurance companies are now starting to develop Transportation Network Company (TNC) endorsements to add to the Personal Auto Policy to specifically insure this potential hazard. The coverage would “buy back” the public livery exposure while the app is open and looking for fares. It then also turns off when the passenger is picked up as that is when the ride sharing companies policy would be triggered.
Unlike taxis, which are regulated on a city-by-city basis and have to follow specific guidelines, ride-sharing services haven’t had to adhere to the same strict regulations. However, this is beginning to change—some states are enacting laws to set standards and insurance requirements for ride-sharing.
Some ride-sharing companies provide liability insurance for their drivers in excess of their personal liability coverage. However, this doesn’t mean that drivers have insurance coverage for all of their risks.
Drivers can be non-renewed by their insurance company if they engage in a commercial activity on a personal auto policy.
When a passenger gets into a car arranged by a ride-sharing app, he or she automatically agrees to a number of terms and conditions. If the driver gets into an accident and the passenger is hurt, there’s no guarantee that the driver’s insurance company or the ride-sharing service will pay for damages.
Safety is also a concern for both drivers and passengers. A driver never knows the type of person about to get into the back seat.
Tips for Passengers
- Share your trip details with a friend or family member in case a ride goes unexpectedly.
- Before you get in the car, check that the driver’s photo, name and license plate match what’s listed on the app.
- Never share any personal information that the driver doesn’t need to complete the ride.
- Always wear your seat belt.
- Report any unsafe driving on the ride-sharing app immediately.
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