Looking to get in on the Lyft action as a driver? Be careful before you commit.
Lyft is an app based ride-hailing service. Essentially a Lyft user hops on the app, hails a ride, and you as a pre-screened Lyft driver pick them up. At the end of the ride, the passenger can choose to make a “donation” to you, and after Lyft takes up to 20% off the top (their “Administrative Fee”), you get the rest. Pretty easy if you have some free time or are headed in the same direction as someone who needs a ride. But what about if you get into an accident, either your fault and at the fault of another driver? Lyft makes some pretty big promises, advertising the fact that they have a $1 million dollar A++ policy to help cover you in case of an accident. After taking a look at how Lyft operates, if you decide to become a driver, you better hope that extra coverage from Lyft will kick in because most likely your own insurance will not cover your Lyft activities, and therefore will not cover any accidents or injuries rising out of your Lyft driving.
A typical auto policy usually covers carpooling, which is having passengers in a car that are headed to the same place, and the driver doesn’t charge anybody or everyone splits the cost. As soon as you start driving people around for profit (some insurance companies don’t even care if you get paid, you just have to be transporting people), you need commercial insurance, just like the type of insurance most taxis have. If you get into an accident while performing a commercial venture, guess what: your claim for both your car and any injuries arising from the accident will most likely be denied because you were performing a commercial duty outside of what your policy covers or something your policy strictly prohibits. This brings into question whether the umbrella policy that Lyft advertises will kick in. The Lyft Terms state: “The policy coverage is limited to liability only and does not provide coverage for collision, comprehensive or wear and tear damage to a Driver’s vehicle.” So it appears that Lyft’s umbrella coverage will not fix your car if it is damaged. What about other damages and injuries? The insurance carrier of the umbrella policy may deny coverage based on the primary insurance company’s assertion that there is no coverage for a commercial enterprise. You may be personally on the hook for your vehicle’s damages, your injuries, and the injuries of your passengers as well. Lyft’s Terms state: “Such Driver will be solely responsible for any and all liability which results from or is alleged as a result of the operation of the vehicle such Driver uses to transport Riders, including, but not limited to personal injuries, death and property damages.” That’s pretty clear to me that Lyft is putting the burden on your shoulders as the driver. I’d be wary to become a driver for Lyft, and so should you.