A majority of drivers who work for ride-hailing services like Uber and Lyft are usually doing so without letting their insurers know about it.
Most auto insurance companies lack additional coverage for drivers who work for network driving companies. Instead, they require drivers to obtain commercial driving coverage, which would cost drivers thousands more each year.
As insurance companies discover that drivers are working for Uber and Lyft under the radar, due to fears of being dropped, they are coming up with ways to incentivize drivers to come out of the woodwork.
Allstate Corp. has been one of the first major auto insurance companies to provide extra coverage options for ride-hailing drivers. Last week, it introduced a “Ride for Hire” plan that would serve as an optional coverage add-on for Uber/Lyft drivers in Massachusetts. The decision comes after Massachusetts’ largest auto insurer, Mapfre Insurance, launched an expanded automobile policy for ride-hailing service drivers in early May.
This insurance coverage add-on is intended to cover drivers during the periods when they are waiting for customers. Uber and Lyft both have policies that cover drivers as soon as they accept a fare and pick up a customer.
The new insurance policies are estimated to cost drivers an additional $100 a year, on top of their regular insurance policy. However, these new policy additions do not guarantee that drivers will come clean about their driving jobs.
“I don’t know how the industry is going to sell it,” said Chris Russo, president of Russo Insurance Agency in Medway. “A lot of the drivers are cowboys. They look at it as, ‘I’m paying enough for insurance; do I want to add another 7 percent?'”
In Massachusetts, average insurance premiums are some of the highest in the nation. In 2014, the average premium paid by MA drivers was $1,108.
Currently, the state of Massachusetts has no law that prohibits auto insurance companies from dropping drivers who work for ride-hailing companies. Furthermore, the senior vice president of Mapfre, John Kelly, confirmed that the company has denied some claims after finding out that the drivers were working for ride-hailing companies at the time of the incidents.
“I’ve had people call me and say, ‘Am I covered if I drive for Uber or Lyft?'” said Jillian Hanley, owner of an Allstate insurance agency in South Boston. “I would suggest they needed commercial coverage… They’d say, ‘Oh, I don’t drive for Uber,'” and hang up.”
Hanley then expressed how she hopes Allstate’s decision to offer add-on insurance coverage for ride-hailing drivers would persuade more of them to be honest about their driving gigs. Drivers who choose to add these additional coverage options to their plans will be able to offset deductibles when they are on the ride-hailing company’s insurance coverage.