03-13-2017 07:10 AM
Content provided courtesy of USAA.
By Melani Scamardo CFP®, MBA
So-called “ridesharing” companies such as Uber® and Lyft® are working to build up their ranks, and one of their strongest recruiting efforts is aimed at military members.
The rapid rise in popularity of these services in big cities is creating many job opportunities as drivers. If you’re thinking about signing up to join the “sharing economy,” we suggest you make sure you and your car have appropriate insurance coverage.
Ridesharing companies, more formally known as “transportation network companies” (TNC), use online links or smartphone apps to connect passengers with drivers who use their personal vehicles as alternative taxicabs.
Uber has been particularly ambitious in targeting current uniformed personnel, veterans and their spouses. In 2014, it launched an initiative called UberMilitary that aims to employ members of the military community.
The sales pitch by Uber is that, by attaching themselves to the company, military members become self-employed transportation entrepreneurs with the flexibility to work full time or part time. In appealing to spouses, the company makes a valid point that frequent household moves — an integral part of military life — make it difficult to have a traditional job.
There are insurance considerations to keep in mind.
Ridesharing drivers are typically covered by their personal auto insurance prior to activating the TNC’s mobile app and then by a commercial insurance policy when they are matched with a passenger. Between those events — after turning on the mobile app but before connecting with a passenger — they may face an insurance coverage gap.
Colorado was the first state requiring TNCs to provide primary coverage to drivers in the “unmatched” phase if coverage is not available through another source. That state’s law sets minimum coverage limits, which may not be sufficient to adequately protect a TNC driver in the event of a claim.
If you’re a USAA-insured driver thinking about working for a TNC, you should know you are not covered by your personal auto policy during the unmatched phase of the ridesharing process.
However, USAA is testing optional insurance coverage for ridesharing drivers to bridge the gap during the unmatched phase. A pilot project now underway in Colorado will be evaluated to determine whether this option benefits our members. USAA may expand the pilot to other states to gather additional data.