Is your insurance premium going to increase because of Uber & Lyft? Follow up.

If you own a car and pay for insurance you are subsidizing Uber X, Uber Select and Lyft (officially termed by regulators as, Transportation Network Companies, TNC’s). Next time you use any of these services ask the driver if they have notified their insurance provider and their auto finance company that they are driving with these services. In California the answer you’ll get 7 out of 10 times is “no”. Don’t just take my word for it, Google it. Some research brought me to a link from Uber itself for drivers which appears to contradict all of the published reports and blogs from insurance companies by suggesting to potential drivers that they need “at least” a personal insurance policy. There’s also this link from the Rideshare Guy, who makes his money recruiting and marketing to TNC drivers. Pay close attention to the California section.

When an under insured TNC driver files a fraudulent claim they most likely had the accident while working, either while trying to find a fare or on the way to work to start finding fares. For example many of the TNC drivers in San Francisco live in the outer ring suburbs or even in Sacramento and Stockton. There’s tales galore of drivers sleeping in their cars or crashing on couches or Airbnb’ing it so they can drive in the City on weekends. When drivers have accidents they are having accidents they otherwise wouldn’t have had. That drives up personal insurance rates. If the drivers were appropriately insured then the accidents they have would drive up TNC insurance rates instead. According to the Rideshare Guy there are at least 70,000 of these cars on California roads and the majority aren’t appropriately insured.

TNC drivers put more miles on their cars than people driving their personal cars do, so their “exposure” is substantially greater. In risk management “exposure” means that you are vulnerable to risk. It’s not clear how many miles the typical Uber X driver puts on the car each day because Uber and Lyft don’t share any information unless they’re forced to. The number is as high as 700 miles by one driver here but the consensus seems to be 150 — 200 miles. To give you some perspective, a typical San Francisco medallion taxi drives 90,000 miles per year, that’s about 247 miles per day. The average American is said to drive about 15k miles annually. That means a San Francisco taxi is six times more likely than you to be involved in an accident, regardless of who’s at fault. So if you have had one accident in your life then statistically you would have had six accidents as a taxi driver. That is reflected in taxi insurance rates which in SF are about $12k annually for $1m in full time liability coverage. That TNC driver though could very well be paying just the state minimum for a personal insurance policy for a car based in Merced, Ca., about $400 per year. That’s 1/30 the cost of insurance for a San Francisco taxi and you as a car owner in California are paying the difference…