# Over $1M liability coverage ?



## madbrain (Jul 16, 2016)

My husband is considering driving for Uber and Lyft. My broker has found an insurance company that will offer full TNC coverage during period 1. However, during periods 2/3, only the Uber insurance coverage applies. We normally carry a $2M umbrella policy, but it excludes any commercial activity, and wouldn't apply.

My insurance broker has been looking for umbrellas that would cover TNC, but has struck out so far. Is there any such policy out there ? The $1M in coverage offered by Uber for periods 2/3 is not adequate for us.

How have other drivers solved this ? Purchased commercial insurance ? Setup an LLC ? Both ?


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## SFAgentKyle (Mar 16, 2016)

What state are you in?


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## madbrain (Jul 16, 2016)

I'm in California.


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## SFAgentKyle (Mar 16, 2016)

Umbrella policies extend coverage from your personal auto policy. Since personal auto policies don't cover liability in periods 2/3 (this is part of the CA legislation), neither would a personal umbrella policy. There isn't an umbrella that would "add coverage" to periods 2/3 without it first being covered on the underlying personal auto policy.

Driving for a TNC is a significant risk if you have substantial assets or income. The maximum liability protection is $1 MM and beyond that, someone can come after you personally. Attorneys see an easy payday (and free headlines) with that Uber/Lyft sticker on your windshield.

Purchasing commercial insurance would be your best bet, but likely not financially feasible. If you come up with another solution, let me know as I have talked many prospective clients/drivers out of rideshare due to this issue.


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## madbrain (Jul 16, 2016)

SFAgentKyle said:


> Umbrella policies extend coverage from your personal auto policy. Since personal auto policies don't cover liability in periods 2/3 (this is part of the CA legislation), neither would a personal umbrella policy. There isn't an umbrella that would "add coverage" to periods 2/3 without it first being covered on the underlying personal auto policy.
> 
> Driving for a TNC is a significant risk if you have substantial assets or income. The maximum liability protection is $1 MM and beyond that, someone can come after you personally. Attorneys see an easy payday (and free headlines) with that Uber/Lyft sticker on your windshield.
> 
> Purchasing commercial insurance would be your best bet, but likely not financially feasible. If you come up with another solution, let me know as I have talked many prospective clients/drivers out of rideshare due to this issue.


Thanks for the reply. Our net worth isn't huge by local standards, but it's definitely over $1M, which is why we carry a personal umbrella. I would guess that net worth over $1M is likely the case for a significant number of households in the SF bay area if they own their home, and have any significant retirement savings. It's a little puzzling to me that Uber won't even offer additional liability coverage. I can understand them not wanting to play the role of an insurance company, but insurance is certainly a money maker for rental companies and so on, so why not ? All they have to do is play middleman.

As it stands, it looks like Uber offers full commercial coverage in periods 2/3 if you have collision and comprehensive on your personal policy.
But it appears one would need a commercial umbrella, rather than personal umbrella, to go over the limit. I have asked my current agent for a quote - he says it's available. Not sure if it will be prohibitively expensive or not.


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## SEAL Team 5 (Dec 19, 2015)

madbrain said:


> My husband is considering driving for Uber and Lyft. The $1M in coverage offered by Uber for periods 2/3 is not adequate for us.
> 
> How have other drivers solved this ? Purchased commercial insurance ? Setup an LLC ? Both ?


Exactly, set up an LLC and carry a liability with a $2 million general aggregate. Our vehicles are with Wilshire and the business is with Zurich. You must have some very nice assets that you need to protect. We do it basically because all our vehicles are full size SUV's and can carry up to 7 pax. Have some uninsured drunk run a red light and the bills could easily surpass $1 million.


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## SEAL Team 5 (Dec 19, 2015)

SFAgentKyle said:


> Attorneys see an easy payday (and free headlines) with that Uber/Lyft sticker on your windshield.


I use a similar catch phrase all the time in this forum. I say if you drive for Uber it's like driving down the freeway with a big sign on your car that says "please sue me, I'm worth $60 billion".


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## Dback2004 (Nov 7, 2015)

My insurer is American National Property & Casualty. My auto policy has a "Business use of a vehicle" rider that covers Phase 1 & 2 (other companies call this "Gap" or "rideshare coverage.") With that I added a $1M umbrella to bring my coverage up to 1.25M, enough to cover my assets today, but I can increase it up to $5M as needed. In Phase 3, the livery exclusion to my policy kicks in and I'm reliant on James River for their coverage.

Also to cover my rear end, I established a sole-member LLC by filing paperwork with the State. I then went on the IRS website and obtained an EIN number so I could open a dedicated business checking account at my bank. I went into the Uber Partner portal and changed my account type from "sole proprietor" to LLC and put in my EIN number and then changed my direct deposit to the business account. I pay for gas, maintenance, etc out of the business checking account. I also re-titled my car (it's fully paid for so don't have to worry about the mess of notifying the lienholder about ridesharing) under the LLC and registered it (plates) the same. Worst case scenario I get sued beyond my insurance coverage, they can take the car (it's valued at about $6k) and the $500 or so I keep in the checking account. My personal assets are protected.

Sole-member LLCs are pass-through tax status, so I can just write myself a check (my credit union was able to "link" my personal account to the business one so I can do direct transfers) to pay myself, but the purpose is to separate your business financials from your personal financials. It's called the "corporate veil" and will help reduce liability risk. Note an LLC won't help with negligence risk, that's where the insurance kicks in.

Oh, and I don't drive with trade dress (not required here, check your local laws). No need to advertise I'm a rolling lawsuit


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## SEAL Team 5 (Dec 19, 2015)

Dback2004 said:


> My insurer is American National Property & Casualty. My auto policy has a "Business use of a vehicle" rider that covers Phase 1 & 2 (other companies call this "Gap" or "rideshare coverage." With that I added a $1M umbrella to bring my coverage up to 1.25M, enough to cover my assets today, but I can increase it up to $5M as needed. In Phase 3, the livery exclusion to my policy kicks in and I'm reliant on James River for their coverage.
> 
> Also to cover my rear end, I established a sole-member LLC by filing paperwork with the State. I then went on the IRS website and obtained an EIN number so I could open a dedicated business checking account at my bank. I went into the Uber Partner portal and changed my account type from "sole proprietor" to LLC and put in my EIN number and then changed my direct deposit to the business account. I pay for gas, maintenance, etc out of the business checking account.
> 
> ...


Sounds like you put all your ducks in a row. Good job. Love your last line about the rolling lawsuit. Just make sure with the phase 3 livery exclusion in your policy that you still have comp/coll. with James River.


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## Dback2004 (Nov 7, 2015)

I downloaded a copy of James River's insurance certificates for the 2 states I operate in (the link shows up on the app in the waybill section when you finish a ride, just a matter of collecting both states). It shows in there as does the Uber description on their website that comp/coll is included when on a personal policy.









From what I've read if I ever have to file a claim with JRI it's going to be one helluva fight. I have a pickup that I could drive around while I fight with JRI and/or deal with the courts if I needed to (knock on wood!!)


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## Dback2004 (Nov 7, 2015)

I should also mention I'm part-time, I drive Uber roughly 10-20 hours per month. The total cost of covering my rear was about $60 in state filing fees and about $150 in additional annual insurance premiums (additional over what I had before I started Uber, not total). The IRS EIN was free, just an online form. 

On a couple thousand net revenue from Uber, it's still worth it. Took about an hour to create the paperwork for the State and mail in, 15 minutes to fill out the online IRS forms, an hour to establish the banking account, and a couple hours meeting with my insurance agent.

Every driver should do this!!!


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## Taxi Driver in Arizona (Mar 18, 2015)

More than $1 million in assets and wanting to risk having strangers puke/piss in your car?

Not sure if serious or trolling.


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## Dback2004 (Nov 7, 2015)

Taxi Driver in Arizona said:


> Not sure if serious or trolling.


Not trolling, if you've ever read any of my other posts. You would also see that I'm usually pretty good at avoiding bad pax to limit the amount of damage done to my car. I operate my business intelligently... mostly by not doing everything Uber says are "best practices."

I never said I have a million in assets. I said the 1.25M in coverage is more than enough to cover my assets. As for the OP, when you factor in that a lawsuit can wipe out your house, your retirement, and your future earnings potential, it doesn't take long to get to a mil.


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## madbrain (Jul 16, 2016)

Taxi Driver in Arizona said:


> More than $1 million in assets and wanting to risk having strangers puke/piss in your car?
> 
> Not sure if serious or trolling.


Responding one year later.

$1 million is what many homes are worth around here, and if you have any other savings, you can really quickly get to $1 million in assets.
We don't drive fancy or expensive cars. One of us is not working, but we have 2 cars since we live in a car dependent area. Ride sharing would be a way to earn extra income for the non working spouse, and leverage existing assets (cars), ie. probably no different than what most ride sharing drivers choose to do it for. The insurance situation is what has stopping us from doing it altogether. The financial risk simply seems too great due to inadequacy of the Uber insurance policy. And Lyft insurance policy is even worse.



Dback2004 said:


> Not trolling, if you've ever read any of my other posts. You would also see that I'm usually pretty good at avoiding bad pax to limit the amount of damage done to my car. I operate my business intelligently... mostly by not doing everything Uber says are "best practices."
> 
> I never said I have a million in assets. I said the 1.25M in coverage is more than enough to cover my assets. As for the OP, when you factor in that a lawsuit can wipe out your house, your retirement, and your future earnings potential, it doesn't take long to get to a mil.


Thanks. This is helpful. Unfortunately, single-member LLCs are not allowed in California. It takes at least 3 members to form a California LLC, which is one more than our household size. There is also an $800 annual franchise tax for the privilege of limited liability. This makes it much more problematic and expensive for us to form an LLC in California for this purpose.

Even if we did find a 3rd person to form an LLC, that would still not resolve the insurance question. I have not found a California insurer willing to extend adequate coverage for all periods for a reasonable cost. The Uber/Lyft insurance policies have much lower limits for all periods than our personal insurance. Our current insurer, Safeco, does not offer any kind of ridesharing coverage in California.

So, it looks like ridesharing is still not viable for us in 2017 - which means less income for us, and less in the pockets of Uber/Lyft, the insurance companies, Uncle Sam, and the State of California.


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## Dback2004 (Nov 7, 2015)

I just switched insurance companies (AAA now), no coverage at all during any period, but they won't drop my policy for ridesharing, they'll just decline the claim at which point James River will have to take over which makes me nervous. According to Uber & Lyft they cover all 3 phases now (at least in Iowa & Illinois) but they call themselves secondary for Phase 1 & 2 which means you have to submit a claim to your private insurance first, and if that's declined, then James River takes effect. It makes me nervous because all I get from JR is a certificate of coverage... basically says they have a $1M liability policy in place with Uber. I don't get a full declaration or policy to read the fine print, which I don't like. I haven't ventured out since switching. I have my agent working up quotes for full commercial but it's still pricier than what I earn. 

Also, the umbrella coverage should not just cover your assets, it should cover the risk. If you're sued for $5M and only have $1M in coverage the remaining $4M is coming out of your assets. In the Uber/Lyft world you should be covered by I have a side gig as an independent contractor party bus driver (an actual true IC!) which adds risk, hence the extra coverage. But it's nice for rideshare too.


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## Trafficat (Dec 19, 2016)

Ah the joys of having a net worth of less than $20,000!


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## madbrain (Jul 16, 2016)

I spoke to CSAA today - looks like they have the proper ridesharing coverage in all periods. And umbrella would apply to ridesharing as well.

Unfortunately, my husband currently has 2 points on his license, one from an out of state speeding ticket that he couldn't go to traffic school for, and another from an at-fault accident earlier this year where he hit the curb on a flooded road. And the CSAA program won't allow ridesharing coverage with 2 points. The ticket will drop off his record in Feb 2018, at which point he would be eligible (with 1 point), and the rate would be reasonable, adding about $550/year for the ridesharing coverage option. So it looks like it will be another 6 months before we consider giving it a shot. Still need to run other numbers to figure out whether it makes financial sense or not, but we can really only find that out after starting - if not, he would just stop doing it and drop the ridesharing coverage.


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