Tennessee regulators are warning automobile policyholders that participating in transportation network companies could lead to gaps in their coverage and leave them exposed to monetary damages from an accident.
Transportation network companies have become increasingly popular across the country, especially in highly-populated urban areas where some individuals choose not to own cars.
As conceived, the networks allow an individual to schedule a ride with another individual who then uses his or her own car to provide the transportation for a fee. The driver and rider are linked through an on-line platform.
Uber, Lyft and Sidecar are among those companies operating the transportation networks.
The creation of the networks, however, has given rise to many questions including just whose automobile insurance policy provides what level of coverage in case of an accident.
Tennessee Insurance Commissioner Julie Mix McPeak recently sent out a memo warning passengers and drivers about some of the potential coverage gaps they could be facing.
Transportation networks licensed by a municipality may be required to maintain liability insurance, but not other coverage found in a typical automobile policy. That could include such things as bodily injury, damages to the transport driver’s vehicle and uninsured or underinsured motorist coverage.
Individuals looking to provide transport services may also find that their personal automobile policy contains certain exclusions when the vehicle is being used commercially.
A typical exclusion states that the insurer does not provide liability coverage in cases where the vehicle is being used on a fee-for-service basis. Such exclusions, however, may not apply to car pools or when a driver is engaged in volunteer work and is only being compensated for their mileage.