A friend shared an article with me about technology bringing people together for what is described as “carpooling” or “ridesharing” in urban areas. This article is primarily focused on government regulation, but there is an important insurance aspect to examine: business use of a vehicle insured on a personal auto policy.
These services market as “carpooling” however a closer examination of their websites reveals that they attract drivers by offering a business opportunity of driving people for a fee. See below screenshot for an example.
Under most personal auto insurance policies (PAP) there is an exclusion for carrying people or property for a fee, here is an example from Travelers Insurance:
“For that person’s liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee. This exclusion (A.5.) does not apply to a share-the-expense car pool.”
Based upon the websites for 2 of these companies, it would be argued (and probably won) by an insurance company facing a claim that this is an exclusion and no coverage is due. This could leave you facing thousands (or tens of thousands) of dollars in damages to pay yourself from an accident.
In addition, it is quite possible that you could find yourself facing charges of insurance fraud which is punishable by fine or imprisonment, especially if your policy started after you began participating in one of these programs. The technical term is “misrepresentation” because the company was not aware of the full measure of risk involved when it calculated the premium that you would have to pay for contracted coverage.
Call us today at 215-340-1888 for a free, no-obligation analysis of your current policy and your particular situation before you are between a rock and a hard place.
(Oh, and “carrying persons or property for a fee” also applies to pizza delivery! If you deliver pizza you could find yourself in the same boat- without coverage and facing fraud charges.)