Farmers will become the first large California insurer to start offering a ridesharing insurance product on Thursday.
In an announcement made at the Los Angeles office of California Department of Insurance today, California Insurance Commissioner Dave Jones and Farmers Group Inc. CEO Jeff Dailey outlined the new ridesharing endorsement on Farmers personal auto insurance policies.
The endorsement will add 8 percent to a customer’s premium, and is available for drivers participating in any ridesharing companies, also referred to as transportation network companies, like Uber, Lyft and Sidecar. The new policy enables drivers to select coverages including comprehensive and collision, uninsured and underinsured motorist and medical payments coverage.
“This is the first major California insurer who is offering this not just for one transportation network company, but for all of them associated with Farmers insurance,” said Jones, who headed a National Association of Insurance Commissioners task force to come up with recommendations for state regulators to deal with ridesharing issues. “So this is a big deal.”
Earlier this year Jones approved a filing to enable Uber drivers purchasing coverage through Metromile to add a new coverage endorsement to their personal auto policy.
Jones announced in November that his department was accepting rideshare insurance product proposals in anticipation of a law going into effect in July 1. The law signed last year, Assembly Bill 2293, requires TNCs to carry a $1 million commercial policy for death, personal injury, and property damage, and it specifies coverages for different driving periods.
The Farmers endorsement covers the first period, when a rideshare driver has on a smartphone app and is actively looking for a ride. During this period, under AB 2293 either the TNC or driver must have insurance for $50,000/$100,000/$30,000 with excess coverage of $200,000.
“We think this is really an important coverage for the state of California,” Dailey said.
He called the endorsement “Farmers Ridesharing Coverage,” and said the company was ready to distribute it through its agency channel. “We have a network of close to 4,000 agents across the state of California who are looking to actively start selling this product.”
Los Angeles-based Farmers earlier this year introduced its first rideshare product in Colorado.
Most personal insurance policies have a livery exclusion, which excludes commercial activities from coverage.
Rideshare watcher Harry Campbell, a Newport Beach, Calif. blogger for Forbes who goes by the handle “The Rideshare Guy,” said he believes the Farmers endorsement will reduce the number of ridesharing drivers who are conducting the activity without their insurers’ knowledge.
“My hope is that more companies will follow suit seeing as there are over 70,000 rideshare drivers in California alone and based off the numbers from my last reader survey in January, over 80 percent of them have not told their insurance company that they are a rideshare driver,” Campbell said.
An email reply to a request for comment from Uber spokesman Eva Behrend stated: “It is encouraging that Farmers is embracing ridesharing as an important transportation option and innovating to meet the needs of the marketplace here in California.”
Lyft offered the following comment: “We are encouraged by the creation of modern insurance products tailored for drivers who participate in peer-to-peer transportation, and we hope Farmers’ policy is one of many options approved and available to ridesharing drivers in California.”
Sidecar spokeswoman Margaret Ryan provided a similar comment, and included a call for more such insurance products: “We encourage other insurance companies to also step up and create modern insurance products to serve the thousands of TNC drivers nationwide.”
Despite the turbulence between ridesharing companies, regulators and the insurance industry over how ridesharing activities should be enforced and insured, the activity continues to grow.
In 2014 Lyft reported averaging 2.2 million rides per month and Uber nearly 12 million, and so far in 2015 Lyft reports averaging 2.5 million and Uber 30 million rides monthly, according to figures provided by Jones.
Topics California Carriers Agribusiness
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