to recognize this mindset, since it creates
new potential for insurance and application fraud.
Drivers even share advice on how to get
claims paid after an accident has occurred.
According to a post on UberPeople.net:
“Next time, if you are empty and have an
accident, remove all your Lyft/Uber signs,
and don’t tell your insurance you were do-
ing this if you don’t have full coverage...”
The drivers fear they will be cancelled
by their own insurance carrier as a result
of their misrepresentation. A contributor
on the same site warned:
“If you never mentioned you were doing
rideshare in the police report, you may want
to go with your personal insurance because
Lyft won’t touch it without that deductible.
Whatever you do, don’t tell your insurance
you were doing rideshare. They will drop
you and your insurance will go up.”
Ironically, rideshare companies offer
generous liability insurance coverage, up
to $1 million for injuries. Collision and
comprehensive coverage is available under certain conditions. The coverage is
offered based on what “period” the driver
was in when the accident occurred. Periods are verified based on the pick-up/
drop-off times on the rideshare app.
However, the rideshares’ policies come
with strict guidelines. Just the slightest
circumstance can jeopardize coverage.
This could tempt drivers to misrepresent
the facts to their own carriers to obtain
benefits under false pretenses.
Examples of the “periods”
Here are descriptions of the various “
periods” for a rideshare company driver.
• Offline – When the driver’s app is
turned off. The personal auto policy
would insure the driver. Fraudulent exposures could occur when drivers work
“off the books,” taking rides for cash, or
if they believe their personal insurance is
preferable (e.g., lower deductible.)
• Period 1 – The driver is online and
available for hire. They’re awaiting and
seeking ride requests, but haven’t re-
ceived any yet. This could involve heavy
driving (circling around) in high-traffic/
high-exposure areas that most insureds
do not expose themselves to.
• Periods 2 and 3 – The driver has received
a request “en route” or transporting riders
“on trip.” The rideshare carrier provides liability and limited first-party coverage during
these periods. Exposures for fraud arise if the
driver believes there’s an advantage to going
through his own carrier (e.g., lower deductible or losing his ability to work.)
Drivers might submit claims to their personal insurance for fear of losing their permit
to drive for the rideshare (“deactivation”) or
due to higher deductibles. Uber reportedly
has a $1,000 deductible; Lyft’s is $2,500.
In addition, the driver may not report
the accident to the rideshare company
for fear of losing their livelihood. Some
drivers believe they don’t have a choice.
According to one chat room driver:
“I don’t recommend calling Lyft in case
of an accident...I have a police report stating it was the other driver’s fault. But Lyft
doesn’t care, deactivated my account…
They will deactivate you and you can’t
drive for Lyft anymore. Beware!”
Risk of staged accidents
If any unscrupulous party wished to stage
an accident to obtain benefits, what better
target than a vehicle with a million-dollar
policy? Better yet, with the rideshare app,
the origin and destination are known in
advance. The perpetrators could plan the
pick-up and drop-off points, and the route
in between, perhaps in a desolate area.
Inexperienced drivers could be vulnerable to skilled conspirators.
Another type of staged loss could occur if
the driver reports a loss from a fictitious
hit-and-run accident. Again, this exposes
the carriers to the rideshare’s high limits
for the passengers, who might participate
as false witnesses.
Questionable app status
Drivers might pursue fares with their
app in the “off” position. Imagine an
airport or large city where passengers
hail cabs. Some drivers have accepted
jobs for cash. In an offline status, their
personal insurance would come into
play, creating a major exposure to any
Education & recommendations
Carriers are already revising and interpreting their own policies since rideshare
businesses are only growing. Educating
agents, employees and customers on the
differences in rideshare coverage versus
personal policies is essential.
To adjust to the new world and minimize any fraud exposure, carriers might
elect to insure rideshare drivers – if they
disclose the activity during the application or renewal process. The product can
then be properly rated.
Many of today’s applications do not ask
specific questions to reveal the exposure.
Perhaps add key questions such as:
• Do you drive for any rideshare ser-
vice? If so, which one(s)?
• How long have you worked for a rideshare service?
• What vehicle(s) do you use for rideshare fares?
• Do you consider your rideshare service your primary job?
The rideshare industry is not a fleeting concept. The companies are actively recruiting new drivers daily. The
drivers themselves have methods to
communicate insurance advice online.
As an industry, we need to similarly
keep up and adjust our processes to remain savvy against any potentially-ad-verse exposures.
Richard Wickliffe, CPCU, ARM,
CLU, ( RLWickliffe@yahoo.com), is in
leadership in the insurance industry.
He enjoys writing and speaking about
unique insurance and fraud trends. His
articles have appeared in Claims and
National Underwriter. In addition, he
has published several novels and was
just awarded Best Popular Fiction by the
Florida Book Awards.