Insurance and Finance

Ride Sharing: What You Need to Know

By Jennifer Chappell Smith 10.6.15

On vacation in San Francisco or at home in Houston or Dallas, maybe you’ve used popular ride sharing services like Uber, Sidecar, or Lyft instead of a taxi. Perhaps you’ve even considered making extra cash by signing up with one of these firms as a part-time driver. With new services like these come questions, especially where liability is concerned.

Here are some basics you should know before engaging with a new-style cab service.

How Ride Sharing Services Work

Operating primarily in urban areas, Uber and Lyft let drivers use their own cars to take people from one place to another — just like a taxi service. Drivers undergo background checks, but essentially, anyone with a car could be your driver.

Why They’re Popular

It’s all part of today’s “on-demand” culture. Instead of calling a cab or standing on the curb with your arm in the air, Uber and Lyft users create online accounts, file a payment method, and then digitally “hail” their rides via smartphone. Also, fares are often cheaper than traditional cab rides.

The Risks Drivers Face

Drivers for these firms should know standard auto insurance policies likely won’t offer any protection because the car is being used for a business purpose. “You need to read your policy carefully and make sure you’re not violating the terms and conditions,” warns Darrell Allen, Texas Farm Bureau Insurance Agent in Dallas County. “To remove all doubt, call your agent and go over the policy in detail.” Drivers may find they need to purchase a commercial policy to protect themselves.

While car-sharing services offer drivers some protection, it may not apply in every situation. Drivers may only be covered when a passenger is in the car, which creates a coverage gap when they’re between fares but technically on the clock. If services do cover drivers during these in-between times, it’s likely they will only offer liability protection, not collision coverage.

What About Passengers?

Generally, car-sharing services guarantee passengers will be covered in the event of an accident. But for peace of mind, read the fine print before you dial up a car and hop in.

If you’re involved in an accident using one of these services, stay calm and follow these post-accident steps.

Talk to your Texas Farm Bureau Insurance Agent today about scheduling a 360 Review to make sure you have the auto coverage you need.

Coverage and discounts are subject to qualifications and policy terms and may vary by situation.

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