Is Your Uber-Driving Client Covered By Personal Auto?

If property and casualty agents are looking for a door-opener to revisit their clients, or another aspect of the auto coverage conversation with prospects, it could be as simple as calling an Uber or a Lyft.

Rideshare drivers might know personal-use auto insurance will not cover liability for commercial use unless the policy has a ridesharing endorsement. They might also know that the ridesharing companies cover drivers for up to $1 million if they get into an accident while driving a passenger.

But they might not know about the gray areas where coverage gets questionable. That is when drivers have the app on and are available for a fare or on the way to pick up a rider in Uber or Lyft.

That gap of knowledge is what Cody Berryhill uses to connect with existing clients and expand the auto coverage conversation with prospects as an account specialist with State Farm in Franklin, Tenn. He asks clients if they drive for a ridesharing company and lets them know that they might not be covered in some circumstances if they get involved in an accident while working for Uber or Lyft.

Even the most experienced drivers might not be aware of the gaps, Berryhill said.

“I went to a Christmas event with my girlfriend this past weekend, and we got the XL Black because we were black tie,” Berryhill said.

A sleek GMC Yukon pulled up, driven by the owner of a transportation company who was Ubering on the side. The driver said he recently upgraded his personal vehicle to use for luxury-level ridesharing. But because the driver was using his personal vehicle, Berryhill asked him if he knew that his insurance might not cover his liability.

“He didn’t have the endorsement,” Berryhill said. “So he’s in this really, really nice GMC Yukon and he’s not covered.”

When Coverage Comes Up Short

The driver would be eligible for the $1 million liability coverage if he has riders that he picked up through the app. But if he has the app turned on and driving around while waiting for a fare, he would not be covered by his insurance if he got into an accident.

In those cases, Uber and Lyft would cover the driver

Even if the rideshare insurance accepts the claim, the limits are far less than the $1 million of coverage available when drivers have a rider.

In fact, according to Uber, the company only covers third-party liability when the driver has the app on and is waiting for a fare. The third-party coverage in that circumstance is $50,000 in bodily injury per person, $100,000 in bodily injury per accident and $25,000 in property damage per accident.

When Berryhill asks clients and prospects if they drive for a ridesharing app, he doesn’t take no for an answer. In fact, he expects to hear “no,” so he will say he is mentioning it because the client has options.

He targets younger clients to ask about ridesharing or food delivery. But he will also ask older clients who might have more than two vehicles covered if their children are using a vehicle for commercial purposes. If so, that liability is on them in some circumstances.

Once Berryhill makes a client aware of the exposure, he follows up with how inexpensive an endorsement is – maybe 2% or 3% of the total premium. That discussion can lead to other business.

“What you’re protecting is very important. That's very personal. So I'll try to be very personable to them trying to understand what they need,” Berryhill said. “It's really earning their trust.”

Once the conversation is open, he is able to help clients understand more of their exposure.

“As we do more discovery about them, they [clients] learn a little bit more about the policy,” Berryhill said. “And then I could easily say, ‘Hey, I don't see where you would need this endorsement but you might need this or this right here.’ They might not want it right then, but I’ll make a note of it and maybe we’ll talk to him about it later.”

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].

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Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].