If you don’t know the term ridesharing, you’re sure to know the names Uber and Lyft. These companies fall under the ridesharing umbrella, which are also known as TNCs (transportation network companies). While all those ads to become a driver are enticing, there are a few essential things you need to know before you jump in and offer up your vehicle.
How It Works
Ridesharing essentially means that you are either using your vehicle to transport others to places they need to go, or you are paying a service for the ride. Many times an app is used to set up the pickup location, and the driver heads to that location, much as a taxi would do. The person hops in, is taken to their destination and pays for the transaction – usually through the app as well. If you’re the driver, your percentage of the ridesharing fee will likely be paid through the app or preset arrangements.
Know What Your Insurance Covers
While you may have insurance on your vehicle, it might not cover you when driving for ridesharing. In fact, most insurance policies have a clause that specifically states that use of the vehicle in a for-hire manner eliminates the coverage. Take the time to read your existing policy or speak with your agent – before you get in an accident. Failing to have coverage could result in your paying for everything out of pocket, especially if you’re the one that was at-fault.
Ridesharing Company Insurance Might Not Be Enough
Most ridesharing companies say that they provide insurance to their drivers. However, that insurance may not be enough coverage, and you could end up in disputes depending on when the accident occurs – especially if you don’t have a passenger in the vehicle when an accident occurs. Make sure you understand the requirements and limits before you put too much trust in the agency’s policies.
While those high hourly rates for ridesharing sound promising, you likely won’t come close to what the companies advertise. If you want to make sure you do, you’ll want to track your mileage, fuel costs and maintenance costs on your vehicle that occur due to your ridesharing duties. They can all be claimed on your taxes, which will help offset them since they are considered business costs.
While you might be tempted to jump right in with ridesharing, it’s best to start out part time and keep your full time position. Some areas simply don’t have enough people using them to provide a decent full-time income, especially when you start paying for gas, insurance and the like.