Ridesharing insurance leaves many drivers in the lurch

Ridesharing companies like Uber insure drivers when they're picking up fares, and personal policies are supposed to cover moments when those drivers are waiting for customers. However, BuzzFeed News has learned that it doesn't work that way in practice -- and that's potentially a very expensive problem if you've signed up. While Uber says that "many" personal insurance plans safeguard its drivers in between rides, some of the largest US insurers (Allstate, Geico, Progressive and State Farm) say that these options won't cover ridesharing at any point. They may even cancel your policy if they find out that you're taking paying passengers. Moreover, both Lyft and Uber limit their liability for victims outside the car to $50,000. You could still rack up a huge medical bill if one of these drivers hits you while you're crossing the street.

Commercial insurance can address those gaps. It's frequently much more expensive, however, and Uber frequently tells would-be drivers that they only need personal insurance. It's illegal to misrepresent how you use your car, too. You could face prosecution if you knowingly register a car for personal use when you're primarily picking up passengers, and even having commercial insurance on your personal ride could get you in trouble. California's upcoming ridesharing legislation doesn't appear to address this gap, either, so you'd still need a special ridesharing clause to be truly safe and sound.

There is a national insurance policy that covers both personal and ridesharing uses (although state policies are hard to find), and it's important to note that a few ridesharing services, such as UberBlack, require commercial insurance as a matter of course. All the same, there's a real chance that you're flouting the rules of the road if you enlist. You may not be completely in the clear unless more insurance companies and legislators embrace these tech-driven transportation outfits with open arms.

[Image credit: Bloomberg via Getty Images]