Maryland Warns of Potential Insurance Coverage Gaps for Ridesharing Services

May 6, 2014

Maryland’s top insurance regulator recently issued a notice alerting consumers about potential coverage gaps affecting drivers for ridesharing services.

The Maryland Insurance Administration said technology based ride-sharing ventures, such as Lyft and UberX, continue to grow in popularity. These ventures – sometimes called ridesharing programs or transportation network companies (TNC) – rely on apps and other online platforms to connect paying passengers with drivers who use their own personal vehicles to provide transportation.

But drivers who work for TNCs may not be covered by their personal auto insurance policies while driving for hire, Maryland officials said.

Maryland Insurance Commissioner Therese M. Goldsmith noted there is a common exclusion in most personal auto policies for claims arising while driving for hire, a practice sometimes referred to as livery service.

Officials said those who drive for TNCs should be aware that while every personal auto insurance policy differs, most policies contain exclusions for livery. If a policy contains a livery exclusion, this means that the policy generally will not provide coverage for liability incurred while driving passengers in exchange for remuneration, other than an expense-sharing arrangement, such as a carpool.

Officials said drivers for TNCs should read their policies to determine their specific exclusions from coverage, but a typical exclusion is as follows:

“We do not provide coverage … arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This exclusion does not apply to a share-the-expense car pool.”

Based on this or similar exclusions, insurance companies might deny coverage to TNC drivers who are involved in an accident while driving for hire, according to the Maryland Insurance Administration.

“I encourage anyone who drives for a transportation network company to contact his or her insurance agent, broker or company to identify potential gaps in coverage,” Commissioner Goldsmith said. “Consider whether a commercial auto policy is appropriate to protect you as the driver, your passengers, and any vehicles should an accident occur.”

Source: The Maryland Insurance Administration

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