Know the Risks Before Driving for a Rideshare Company.

Ridesharing services or transportation network companies (TNC’s), such as Uber and Lyft are gaining popularity, especially among tech-savvy millennials, looking to make some quick money using their vehicles. TNC’s use nonprofessional drivers to transport passengers who hail rides through cell phone apps. However, it is important to be aware of the risks and pitfalls involved in driving for or accepting a ride from one of these services.

Ridesharing services and TNC’s are operating in a “legal gray area” because their drivers have not been licensed as livery drivers or taxi’s. Nearly two dozen states, including Massachusetts, Rhode Island, Connecticut, and New Jersey have issued advisories concerning ride-booking services and are working on legislation to regulate the ridesharing industry.

Massachusetts allows each municipality to make its own rules to regulate vehicles for hire. In Boston, taxi drivers must go through background checks and vehicle inspections to get the proper licenses and plates to operate as taxis or livery vehicles. Operating without that license incurs a $500 fine. In Boston, a $500 ticket, may be given to anyone who is not a licensed cab driver who stops for someone hailing a ride on the street. From 2011 to 2014, the number of tickets given to drivers for operating “illegal vehicles for hire” more than doubled, according to data from the Boston Police Department. Last week, Braintree, MA became the first community in Massachusetts to issue a cease and desist order applying to ride-sharing service companies.

TNCs require that drivers provide license, registration, and a copy of a current personal auto insurance policy. However, typical personal automobile liability policies exclude coverage for business conducted via personal vehicle. Recent polls have found that most TNC drivers have not disclosed to their insurance carrier that they are driving for a ride share service. Therefore, anyone driving for a TNC could face a denial or even loss of coverage should they be involved in a crash.

Also, accepting a ride from a TNC driver may represent a substantial safety risk, as some TNCs require background checks while others don’t.

The ride sharing industry is still relatively new and is changing every day. Legislation and new regulations are being considered but in the meantime, there are huge gaps in coverage for TNC drivers. A recent article by PC 360 put it best, “until a hybrid or multi-use policy rolls out nationwide, drivers risk their personal auto insurance coverage and financial ruin well into their future every time they pick up a passenger. TNCs haven’t yet taken responsibility for insurance in certain cases of serious injury, rape or death….Current and prospective TNC drivers must be wary of the assumption that these companies provide coverage. You may wonder how much you could make as a driver, but how much can you afford to lose?”

For more information on the insurance risks involved with driving or taking a ride from a Transportation Network Company, please contact your McSweeney & Ricci Account Manager.

“5 things drivers need to know before working for a ridesharing service”-Property Casualty 360
“Even as Uber, Lyft gain riders, drivers face $500 city fines”-Boston Globe-May 27, 2015

The Standard: Insurers, Uber Reach Deal on Framework for Ridesharing Coverage
The Braintree Forum: Thursday, May 14, 2015 Vol. 140 No. 17 “Board puts the brakes on Uber”

McSweeney & Ricci Insurance Agency, Inc.

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