Closing the Gap on Rideshare Fleet Insurance
The new sharing economy — epitomized by companies like Getaround and Airbnb — has necessitated updates and shifts in the insurance market, as insurers catch up to these new business models and the risks that come along with them. The availability of insurance for fleet companies providing vehicles to drivers for rideshare activities is one of the most recent gaps to be filled. Before I can explore this emerging need, I must discuss the current rideshare coverage landscape.
Rideshare coverage landscape
The major rideshare companies, such as Uber and Lyft, employ drivers who use their personal vehicles. Each driver has their own personal automobile insurance plan, which covers the time when they are using their personal vehicle for activities other than work. Then, when the driver is on the clock, the rideshare company provides about $1 million of automobile liability coverage, which covers the driver for instances when they are at fault in an accident that occurs while transporting a passenger or on the way to pick up a passenger.
This model represents a correction in the insurance market. When rideshare companies first emerged, personal auto insurance underwriters did not ask drivers about rideshare activities, and drivers generally did not disclose such activities, which created a notable risk for both parties. Today, the personal auto industry is much more aware of this exposure, and many insurers are offering policies to rideshare drivers with endorsements that recognize the primary coverage provided by the rideshare companies.
New type of coverage for fleet companies
More recently, a sub-category of the rideshare economy has popped up in the form of fleet companies. These companies make vehicles available to rideshare companies’ drivers who don’t have their own car or don’t have a car that qualifies for use by the major rideshare firms. A car-less rideshare driver can essentially rent a car from the fleet company – but since the driver is not using their own car, their personal auto insurance does not come into play. Traditional commercial auto insurance used by common fleet companies — like a limo service or taxi company — are proving far too expensive for the fleet companies pursuing this rideshare model.
To fill this gap in the marketplace, a select few insurers have become more open to the idea of providing commercial auto insurance for fleet companies, as long as the primary auto insurance coverage for those critical periods (during transport of passengers and time en route to passenger pickup) remains available from the rideshare companies. These insurers still perceive a great deal of risk due to several factors: the activity involves the use of a smartphone, the rideshare drivers tend to be younger, and minimizing the time in transit is critical — meaning that drivers have an incentive to drive fast. The fleet companies, in turn, must screen potential drivers rigorously and deploy monitoring technology effectively. Here are some of the areas you can control as a fleet company that potential underwriters will want to explore in order to minimize the exposure of claims:
- Your process to qualify drivers: the minimum age for drivers, as well as the drivers’ driving records/motor vehicle reports (MVR), criminal history, and credit reports.
- Use of technology: In addition to the rideshare provider’s technology, your company’s use of smartphone apps to track activity, GPS tracking, telematics, and dash cameras, which is highly recommended to protect your business if a claim arises.
- Processing automobile claims: Your claims response process and the process to report claims to the insurer.
The bottom line is that if you are providing fleet vehicles to drivers for rideshare activities, auto insurers want to be able to drill down into how you control your risk exposure and your drivers. For more information, contact me at email@example.com or 443-798-7353.