If you’re like many (or perhaps most) Transportation Network Company (TNC) drivers, you don’t have a taxicab license and you didn’t register the car as a commercial vehicle.
Instead, you probably have a personal auto insurance policy. That’s good to have. But it’s not enough if you want to give rides to other people and earn money as a professional driver.
Many insurance companies offer this coverage as an endorsement, or a rider, that’s added to your personal auto insurance coverage.
Most ridesharing drivers have their own insurance, which typically does not cover passenger damages for injuries that occurred while the driver was driving for profit”
What is TNC coverage and why do you need it?
“TNC” stands for Transportation Network Company. That’s the formal description of ridesharing services.
“Most ridesharing drivers have their own insurance, which typically does not cover passenger damages for injuries that occurred while the driver was driving for profit,” says Glen B. Levine, an attorney and senior partner at the Law Offices of Anidjar & Levine in South Florida.
Personal vehicle insurance is designed (and priced) for the typical driving pattern of someone who doesn’t use the vehicle as a business. Ridesharing insurance, on the other hand, covers the gap that personal insurance doesn’t cover.
For insurance purposes, it’s useful to divide the gap into three distinct time periods:
- 1 – You’re in the ridesharing app, but you haven’t yet accepted a passenger.
- 2 – You accept a passenger, and you are en route to the passenger’s pickup location.
- 3 – The passenger is in your car.
The period when your ridesharing app is closed, and you’re not using your vehicle for ridesharing is sometimes called Period 0.
Some state laws require ridesharing insurance
Colorado is known for an early—2014—law that specified how much insurance ride-sharing drivers need to have in that state.
The law says ridesharing drivers must have TNC-specific insurance. It must include “primary liability coverage of at least $50,000 per injured person, $100,000 for all injuries in an accident, and $30,000 for property damage,” according to the Insurance Information Institute (III).
There are two ways to comply:
- The TNC company provides commercial coverage for the driver 24/7 or when the app is on.
- The driver gets a personal auto insurance policy with an endorsement, or “rider,” that covers ridesharing services.
Other states also have laws that require ridesharing drivers to have some type of TNC insurance.
How to shop for ridesharing insurance
Before you shop around for personal auto insurance that covers ridesharing, you should find out what insurance coverage your TNC offers its drivers.
Both Uber and Lyft offer some insurance coverage for their drivers. However, this insurance won’t cover all three of the gap periods that most standard personal auto insurance policies don’t cover without a rider.
Keep the three periods in mind when you do your research. Coverage may vary from one period to another.
You’ll want to make sure you research and compare policies from at least a few companies to find out what they cover.
How much you’ll have to pay will depend on the state where you operate, the insurance company you choose, and how much TNC coverage you want.
If you’re not able to find ridesharing coverage in your state, you’ll need to purchase a commercial vehicle insurance policy to become a ridesharing driver. Commercial coverage is usually more expensive than a TNC rider.
When you’ve secured your insurance, you’ll be ready to sign up with a ridesharing company. Start driving and begin earning money.