There are lots of ways to use mobile technology that involve thinking outside the box — such as using or driving for Uber, renting a car by the hour, or renting out your car to others. In this case, the “box” happens to be your personal car insurance. If you’re involved in any of these creative uses of automobiles, discover the limitations and exclusions you will face and my suggestions for protecting yourself.
Transportation network companies, or TNCs, recruit drivers who use their own car for a fee. Drivers for companies such as Uber and Lyft pick up passengers and deliver them on demand, all arranged through the TNC’s mobile app.
Unfortunately, personal car insurance almost universally excludes all coverage, including when the car is carrying a passenger and when the driver is looking for passengers. This exclusion applies to liability, uninsured/underinsured motorists and collision coverage.
If you’re a driver for a TNC, such as Uber, be aware you are not insured by your personal auto insurance or your umbrella policy, from the time you log in as an available driver until the moment you log out. So if your $30,000 Toyota gets crushed in a car accident, the cost to repair is yours to bear alone.
The reason? Your personal and umbrella policies exclude coverage when using your vehicle to haul people for a fee. A few car insurance companies are starting to develop endorsements for personal auto policies that, for an additional premium, will waive this exclusion. However, until these endorsements are also available on umbrella policies, I recommend you avoid the risk.