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Smartphone apps and ongoing mobile technological advancements are changing how we use services. Companies like Lyft, one of the “transportation network companies” (TNCs) across the US, created their own app for customers to request taxis, and for drivers to transform their cars into private taxi services with the tagline “your friend with a car.”
Lyft is headquartered in San Francisco, and operates in cities across the entire country. Instead of accepting fares, passengers make “donations” through the Lyft app, which are later deposited into the bank accounts of the drivers, usually in the amount of 80 percent.
But if you are considering registering your car with Lyft to make some extra money, there are a few conditions to keep in mind. The most important condition is that your personal car insurance is unlikely to protect you or your vehicle in the event of an accident while on the job.
In most US jurisdictions, car insurance policies include clauses where coverage is suspended when drivers charge passengers for a ride, known as a livery exclusion. Robert Passmore, a senior director with the Property Casualty Insurers Association of America, says drivers who work for TNCs fit the requirements for insurers to suspend personal coverage.
“TNCs give strangers rides for a fee, and the drivers are getting paid. That would generally trigger the livery exclusion.”
By joining with Lyft, you are legally required inform your personal car insurer of your intentions. If you are in an accident on the job without forewarning your insurer, your claim could either be denied, or your insurance could be cancelled altogether.
Lyft maintains liability insurance for all registered vehicles in the amount of $1 million, but the clause specifically states that coverage is “for property damage and bodily injury of passengers and/or third parties.”
The clause makes no mention of the primary driver or any comprehensive coverage that would protect the driver’s vehicle in the event of an accident. As a result, drivers should be cautious in registering to join the Lyft team if it means their car insurance is suspended or eliminated.