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Ridesharing programs are becoming more widespread. These services use smart phone apps that match people driving cars with people needing rides. Win-win, right? The driver gets some extra money and the rider gets a lift to their destination. Ridesharing is expanding quickly in areas like Ontario, Alberta and British Columbia.
However, there’s always some kind of ‘but’ that needs to be addressed. In this case it’s car insurance. Most people use their cars for personal reasons, driving to and from work, getting groceries, taking the kids to soccer practice or going on trips in the summer. Insurance companies recognize this as normal personal use and therefore have insurance policies designed specifically for that kind of vehicle usage.
What happens when a driver signs on to a ridesharing program and picks up his or her first ride? Suddenly, his vehicle goes from personal use to commercial use. Because she is receiving payment for a service her car is now being used for business. This new usage is no different than a professional taxi driver getting paid for driving fares about the city. This changes the nature and magnitude of the risk And that means the rideshare driver’s insurance also needs to be on a commercial auto insurance policy like that of a professional taxi.
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What happens when you, as a rideshare driver, have a single vehicle accident while carrying a passenger? If you have the correct commercial insurance policy in force to cover your vehicle, that reflects how you use that vehicle, you can be protected for damage to your car (provided you have collision coverage), and more importantly, you will have Accident Benefits Coverage (ie injury benefits coverage) for both you and your passenger should either of you be hurt in the accident.
If you do not have the correct commercial auto insurance policy, your policy could be voided and any claim denied. Drivers and vehicle owners are sued all the time for accidents and injuries and it’s better to have the coverage and not need it than to suddenly wish you had the coverage when you most required it.
It Pays to do Your Research.
If you are interested in joining a ridesharing program then do some research. Check with the program itself to see what requirements it has for drivers taking part. Check with your insurance broker to see what changes will need to be made to your auto insurance policy before you start picking up passengers. And finally, check with your city or municipal bylaws to make sure you’re following proper protocol. Some cities, such as Toronto and Ottawa, have ridesharing programs which have already launched, but are not considered fully legal in those jurisdictions. Other cities such as Hamilton will subject drivers to a fine of $5,000 if they get caught driving for a rideshare service. Why? It’s because Hamilton looks at ridesharing programs as essentially a taxi service and therefore has penalties for drivers looking to skirt around the city’s taxi regulations.
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At the end of the day you are responsible for driving your vehicle and ensuring it is properly insured to reflect how you actually use it.
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