With emerging smartphone app technology, the demand for ride-hailing services around the country has continued to increase for business and personal travel. In California, many of these ride-sharing services, such as UberX, Lyft, and Sidecar, are growing exponentially in diverse counties and metropolitan areas like San Francisco and Los Angeles. The number of drivers in ride-hailing services, who make extra money driving consumers around in their personal cars, has also increased.
However, a dangerous insurance gap exists for both consumers and drivers of these ride-sharing apps. California recently passed a new law that states shared ride drivers are not covered by insurance while transporting clients, which increases the risk for car accidents not protected by law.
Starting May 28, Farmers is offering a new insurance product that closes the gap in insurance coverage for drivers of ride-hailing companies like UberX, Lyft, and Sidecar.
“We are pleased to announce this new insurance product in collaboration with Farmers, the first major insurance company to offer drivers’ insurance,” said Insurance Commissioner Dave Jones of the California Department of Insurance. “Closing the insurance gaps in ride-hailing coverage is essential to making sure passengers, other drivers and pedestrians are protected when ride-hailing vehicles are on the road. I’m pleased to see Farmers offer a product that closes the coverage gap.”
The new insurance product covers what’s known as “Period 1” in the ride-hailing process. Once a driver turns on his or her application and is going around waiting a match, Period 1 begins. Period 1 is currently not covered under California law, which can be a liability.
The actual match between driver and passenger, called Period 2, and the transport ride to the passenger’s destination from the moment he/she steps in and out of the car (Period 3) are covered by the transportation company’s insurance.
“With Farmers’ new commercial policy, now both the driver and consumer is covered for any damage that could potentially occur in Period 1,” said Farmers Group Inc. CEO Jeff Dailey in a press conference announcing the product. “We have a network of close to 4,000 agents ready to sell coverage.”
The new insurance policy enables drivers to select coverages that fit their needs, including comprehensive and collision coverages, uninsured and underinsured motorist coverages, and medical expenses coverage. Including Farmers’ new ride-sharing coverage to a driver’s policy will add 8 percent to the customer’s premium.
The Farmers insurance also exists even if the customer is using several apps at the same time, providing safer opportunities and more benefits than the regular insurance in case of an event.
“It’s a positive thing to offer drivers a choice; it gives them the ability to decide whether they want to be covered themselves, as well as protection and peace of mind,” said Jones. “The real benefit is that this fills the insurance gap, protecting drivers from financial loss.”
California is the second state to offer a major new policy for the drivers of ride-sharing services.
Today, there is a 20 percent increase in ride-hailing use from the first quarter in 2014 to the same quarter in 2015. Lyft reports an average of 2.5 million rides per month and Uber reports 30 million.
“We want to thank Commissioner Dave Jones [and the California Dept. of Insurance] for their leadership in helping to make this important, new coverage available to California drivers. As a California-based company, Farmers is proud to be the first major insurer to offer rideshare coverage to consumers in the state,” finished Dailey. “We recognize the sharing economy will continue to have a long-lasting effect on our state and we are committed to continue to work with the commissioner and the entire department on innovative solutions for the benefit of California’s consumers.”
For more information about the drivers’ insurance program, and to find a local Farmers agent, please visit www.farmers.com/rideshare.
(LA Weekend May 30 – June 2, 2015 Sec. D pg.2)