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Bellefontaine Ohio auto insurance and ridesharing- Alan Galvez InsuranceIt's sweeping the nation and has come to four Ohio cities. Ridesharing, the newest transportation sensation, appeals to both drivers and passengers, but there’s a flipside of potentially significant insurance problems for drivers unaware of the whole story.

Learn the facts and examine your own car insurance coverage so you can decide whether you want to participate.

What is ridesharing?

Ridesharing means vehicle owners transport passengers in their own cars for a “donation.” Drivers sign up with a service called a Transportation Networking Company (TNC) that charges a fee to connect passengers with drivers online or via a smartphone app. Passengers arrange rides and pay with a credit card using the app.

Currently, ridesharing services are offered in Cincinnati, Cleveland, Columbus and Toledo by well known TNCs Uber and Lyft, as well as others. Potential drivers love the flexible hours and this easy way to earn extra money. Passengers like the fares, which often cost less than a taxi ride.

But not everyone is enamored. Cities all over the U.S. advocate regulation through vehicle inspections and background checks on rideshare drivers. Taxi and livery services argue that ridesharing gets an unfair advantage since drivers don't have to conform to the same standards and regulations as their services.

“This is a very complex issue with so many layers that are complicated in their own right,” said Ted A. Kinney, CIC, CPCU, ARM, instructor for Professional Independent Agents of Ohio, Inc. and owner of insurance consulting firm Kinney Training & Consulting, LLC. Kinney published an analysis on insurance issues surrounding ridesharing and vehicle sharing in June 2014.

What is vehicle sharing? ...

Vehicle sharing allows auto owners to rent their cars to others when not in use. The risks and exposures to insurance companies are so significant with vehicle sharing that ISO, the leading developer of standard insurance policies, issued an endorsement in Oct. 2013 that excludes personal auto coverage when a driver is using their vehicle for vehicle sharing purposes. So coverage is void while participating in vehicle sharing.

Drivers cautioned

The insurance risk to drivers is that neither ridesharing nor vehicle sharing services are covered by traditional personal auto insurance policies. Most policies have exclusions that apply when using a vehicle to transport people or property for a fee. Some insurers either rely on their current "public or livery" exclusion or add an exclusion that precludes
coverage when a vehicle is being used for ridesharing or is rented to others. Other companies will automatically nonrenew a policy when they find out the insured is involved in ridesharing.

"Perhaps the only option is for drivers to purchase commercial insurance for this exposure at a cost of thousands of dollars a year, but that’s not viable for the average insured," Kinney said.

The Ohio Department of Insurance (ODI) has voiced concerns too. It issued a consumer alert in April 2014, warning of potential insurance implications. "Ohioans considering these types of services should weigh all factors, including any coverage gaps that may exist. While the driver may have insurance, his or her policy may not provide all the
coverage needed should an accident occur," said Ohio Lieutenant Governor and Insurance Director Mary Taylor.

The case of a six-year-old girl who was killed in a collision with a ridesharing car in San Francisco this past New Year’s Eve punctuates the point. Because the driver wasn’t transporting a passenger at the time of the accident, the rideshare company, UberX, said he wasn't covered by their policy – leaving the driver financially responsible. The
case is still in litigation, but it is estimated that damages could go as high as $20 million.

There are similar stories of accidents and injuries involving ridesharing vehicles all over the nation.

TNCs respond to concerns

Some TNCs now offer excess liability insurance, but that doesn’t include coverage for: medical payments, collision, comprehensive, and uninsured and underinsured motorists coverage.

More recently, some TNCs began offering primary insurance. For example, UberX provides liability and collision coverage if the driver’s personal auto policy doesn’t apply. It is important to ask the TNC about its auto insurance coverage.

Regulation concerns

In late April 2014, the city of Columbus was denied a temporary restraining order filed against UberX while the city pursued a lawsuit against the company. When that order was denied, the city withdrew a similar request for a temporary restraining order against Lyft. In mid-May, Columbus officials said they will ticket drivers of UberX and Lyft vehicles until the lawsuits are completed and the city has finished writing rideshare regulations. UberX responded by saying they will pay fines for their drivers who receive tickets
while driving for UberX in Columbus. The maximum fine is $150.

Passengers beware

Passengers must also be aware of possible insurance problems. If the vehicle driver doesn't have insurance and there is an accident, the passenger may be forced to hire an attorney and file suit for injuries against the driver; this can be costly and provides no guarantee of an enforceable settlement.

In addition, the passenger may have to file a claim under their own auto insurance policy's medical payments or uninsured motorists coverage.

The story continues to unfold daily, with rideshare drivers, TNCs, livery services, insurers and insurance agents watching closely. No matter the outcome, if you are a ridesharing driver, contact us to learn what coverage you have and what your best options would be. You can also call us at (937) 592-4871 or request your auto insurance quote on our website
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Alan Galvez Insurance
134 W. Columbus Ave.
Bellefontaine, OH 43311

 (937) 592-4871

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