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The Orange

Resources for the modern insurance agent

Auto Insurance in the Age of Uber

by Steven Butler, National Sales Executive

March 9, 2016

Gray areas have emerged in the realm of auto insurance coverage as a result of the exploding rideshare industry. Will these ambiguities end up hurting the very drivers who are steering this new gig economy forward?Uber

If you don’t know about Uber, Lyft, and the ridesharing revolution by now, it’s probably time to come out from underneath that rock. After displacing traditional taxi cab services in urban centers across the U.S., industry leader Uber now has a $62.5 billion valuation, according to CNBC, an estimated eight million users, and a presence in 334 cities in 60 countries worldwide (Lyft operates in 61 cities in the U.S.).    

That massive presence means more cars on the road — an estimated 400,000 for Uber alone, with more coming into the fold every day, according to The Rideshare Guy — most of which are operated by self-employed, independent drivers. While this is fantastic news for consumers in need of a ride, the new market presents the auto insurance industry with a dilemma: how exactly does the auto insurance industry deal with this new segment of semi-professional drivers?

The Uber Insurance Gap

The system currently in place for covering rideshare drivers is shaky at best, as the Insurance Answer Center emphasizes. Since the overwhelming majority uses the same car for work and their own personal transportation, insurers must offer multiple tiers of coverage. 

It works like this: when rideshare drivers are off the clock, a personal car insurance policy is all that’s required — they’re just like any other car on the road, after all. But once the rideshare app is activated, a low-level liability insurance policy (covered by the company they’re driving for) kicks into gear. Once a fare is accepted, the level of coverage expands and remains active until the passenger is delivered to their destination.

While it’s somewhat complicated, the model seems sensible enough to work. But unfortunately, the issue isn’t quite so cut and dry — many personal auto policies have coverage exclusions for “driving-for-hire,” since the liabilities are much higher and commercial driver’s licences have traditionally been the norm. Many rideshare drivers lose their coverage as a result, and fall into an insurance gap: a recent report found that only about one in five drivers have a policy that keeps them covered for every hour they’re on the road, according to Insurance Journal.   

New Policies, New Opportunities

Thankfully, insurance carriers have seized the opportunity provided by this new breed of customer, crafting new types of policies specifically for rideshare drivers, according to PolicyGenius. Allstate, Geico, Farmers, and State Farm have created or expanded policies in certain states for all rideshare drivers, while other insurance companies have allied with either Uber or Lyft exclusively. 

For agents selling auto insurance, these new segments of both drivers and policies provide great opportunities. When speaking with potential customers, broaching the topic of ridesharing and its implications should now be standard practice — for uninformed rideshare drivers, the value of an agent’s expertise might be the difference between complete coverage and none at all. 

Harry Campbell, a blogger who goes by the handle “The Rideshare Guy,” believes that insurance agents are an invaluable resource to drivers. 

“I think that, as far as advice for agents, the best place where they can start is educating themselves on these rideshare insurance policies. Where are the gaps in coverage?... In educating yourself and learning about the rideshare insurance policies, so that when you do have Uber and Lyft drivers come to you, you can be very knowledgeable and be a really good resource for them.”

After brushing up on the new policy details, agents should be looking to engage this audience where they’re most active: online, whether via desktop or on their mobile devices. By utilizing forward thinking digital marketing strategies like online lead generation services and pay-per-call marketing campaigns, expert salespeople can connect with rideshare drivers looking to fill their coverage gaps. A more proactive approach to ridesharing will both give sales numbers a nice bump and ensure that everyone on the road is safely covered.

(Main image credit: freestocks.org/Pexels)

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