TDCI: Ridesharing Drivers Should Check Insurance Coverage for Gap

NASHVILLE – As ridesharing becomes more popular, the Tennessee Department of Commerce and Insurance (TDCI) strongly encourages people who drive for ridesharing companies, also known as Transportation Network Companies (TNCs), to review their auto insurance coverages for a potential coverage gap in order to avoid unanticipated out-of-pocket expenses in the event of an accident.

Most personal auto policies do not offer coverage in their standard policies for drivers when they are driving for TNCs but do often make such coverage available for an additional premium.  There are three distinct periods that characterize when a driver is operating as a TNC driver: 

• Period 1: when the driver logs into the TNC application but is not yet matched with a passenger;
• Period 2: when driver has made, and accepted, a ride with a prospective passenger but that passenger is not yet physically in the vehicle;
• Period 3: when the driver has picked up the passenger and the passenger is occupying the TNC driver’s vehicle.

A coverage gap may occur in Period 1 for drivers of some TNCs.  Tennessee statute (Tenn. Code Ann. § 55-12-141(d)(2)) requires TNCs to provide coverage that meets Tennessee's uninsured motorist (UM) provisions (Tenn. Code Ann. § 56-7-1201) for TNC drivers  in all three periods.  The UM statute, however, allows a named insured, in this case the TNC, to affirmatively decline UM coverage (Tenn. Code Ann. § 56-7-1201(a)(2)).

"We have recently learned that at least one TNC has agreed to accept and, thus, provide uninsured motorist coverage in Periods 2 and 3, but opts out of UM coverage during Period 1 in Tennessee and other similarly situated states,” said TDCI Assistant Commissioner Michael Humphreys. “This opt-out may leave TNC drivers that have not purchased specific coverage through their primary auto insurer without UM coverage in at least Period 1. We urge TNC drivers to review their coverage options to ensure that they are protected for the totality of their driving needs, including when they are logged into the TNC application but have not yet accepted a ride."

Under Tennessee statute, an insurer offering personal auto may expressly exclude coverage under the terms of the policy during times an insured is acting as a TNC driver, and the exclusion alleviates the insurance company from a duty to defend or pay any claim.  However, the Department has approved several insurance company filings that seek to supplement personal auto policies with broad coverage for policyholders participating in a TNC program. Consumers that drive for a TNC should check with their primary auto carriers for such benefits and may wish to confirm coverage with their TNC(s).

As an additional reminder, all ridesharing companies and/or their drivers operating in Tennessee must follow these regulations:

• Drivers, or a TNC on behalf of their drivers, must maintain primary auto coverage that recognizes the driver as a TNC driver.

• When logged on to the app but not engaged in a prearranged ride (has not been connected with a rider), the driver must have primary auto liability insurance of at least 50/100/25 (dollar limits in thousands for bodily injury per individual/bodily injury per accident/ property).
• When the driver is engaged in a prearranged ride, driver must have primary auto liability insurance at a minimum of $1,000,000 for death, bodily injury, and property.
• Drivers must carry proof of coverage at all times and are prohibited from transacting their business in cash.

The Tennessee statute is substantially based on model legislation developed by TNCs and insurance companies.

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