Filed Under:Agent Broker, Personal Lines Business

California OKs rideshare coverage from State Farm, USAA

California drivers who work for Uber and Lyft now have two more insurers they can buy coverage from. (Photo: iStock)
California drivers who work for Uber and Lyft now have two more insurers they can buy coverage from. (Photo: iStock)

Major insurers are jumping into the pool to provide new auto insurance coverage options to California drivers working for ride-hailing companies such as Uber and Lyft, The Sacramento Bee reported.

This week, California Insurance Commissioner Dave Jones approved Bloomington, Ill.-based State Farm and San Antonio, Texas-based USAA to begin offering coverage for policyholders using their personal cars to provide rides through transportation network companies (TNCs).

USAA’s statewide coverage is available now. State Farm will offer its “Transportation Network Company Driver Coverage” endorsement in California starting March 21. The insurers said that their products help fill insurance gaps for policyholders driving for Lyft and Uber, both of which are headquartered in San Francisco.

State officials said USAA and State Farm are entering a California niche being serviced by more than a half-dozen insurers, including Los Angeles-based Farmers Insurance. Not all coverages are the same. San Francisco-based Metromile, for example, last year started coverage for Uber drivers based on a flat fee and miles driven, the Sacramento Bee reported.

Some industry analysts contend that inadequate insurance has prevented the ride-hailing sector from growing faster because some prospective drivers were fearful of their degree of liability in a crash. In many cases, personal auto insurance policies did not extend coverage to those using personal autos as ride-share vehicles, the newspaper said.

Ride-hailing companies in California provide $1 million liability coverage when a paying passenger occupies the driver’s vehicle or when the driver has been connected with a passenger and is on the way to pick up that person. However, they provide much more limited liability coverage when drivers are simply “available for hire,” when coverage may not extend to medical payments, comprehensive coverage or collision coverage.

State Farm says its new TNC Driver Coverage lets a policyholder have a personal Auto policy to fill in the coverage gaps left by TNC-provided insurance. USAA’s coverage does the same, providing drivers with the full liability coverage limits in their Auto policies during the time the drivers are “available for hire.” Additionally, the products provide drivers with all other coverages applicable to their Auto policies during all periods of TNC driving, the newspaper said.

USAA said the new coverage to a driver’s existing policy will add 7% to the premium, or about $6 to $8 more per month on average.

State Farm spokesman Sevag Sarkissian told The Sacramento Bee the cost of that insurer’s coverage “will vary … and be specific to the customer depending on the coverages they choose.”

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