Progressive will offer insurance to Pennsylvania Lyft drivers under pilot program
March 13, 2015 12:00 AM
Progressive’s Pennsylvania pilot is for Lyft drivers only and excludes drivers for much larger rival Uber.
By Kim Lyons / Pittsburgh Post-Gazette
In a first-of-its kind pilot program, Progressive Corp. this week rolled out an auto insurance policy that will cover Lyft drivers in Pennsylvania, even when they’re off the clock.
The ride-sharing auto insurance policy will be available to any Lyft driver in Pennsylvania who otherwise meets Progressive’s coverage criteria, company spokeswoman Erin Hendrick said.
“It is a new policy that must be purchased and it will replace their existing personal auto coverage,” she explained in an email. “Progressive does not provide coverage for ride-sharing with its personal auto policy.”
The policy insures Lyft drivers even when they’re off duty, Ms. Hendrick said.
That’s a crucial distinction, and the personal policy issue was a huge stumbling block in the ride-sharing companies’ battle for approval from the Pennsylvania Public Utility Commission.
Because Lyft’s and Uber’s services in Pittsburgh connect drivers in their own vehicles with passengers via smartphone apps, questions arose about how personal auto insurance policies would handle coverage. Most personal, non-commercial auto insurance policies do not cover commercial activity, which includes most forms of transportation for compensation.
Lyft and Uber argued that their insurance policies, both administered by Virginia-based James River Insurance Co., should not be in effect if drivers, all independent contractors, were off the clock.
So regulators within the PUC and the Pennsylvania Insurance Commission wanted to clearly establish the rules of when a ride-sharing company’s insurance would be activated and when the driver’s personal policy would be in effect.
In the end, the two sides agreed on a tiered system, so that the ride-sharing company’s insurance coverage goes into effect as soon as a driver signs into an app as active and increases the coverage when a driver is en route to pick up a passenger and again when a passenger is in the vehicle.
In addition, the PUC commissioners included a provision in each company’s license requiring drivers to inform their insurance companies in writing that they were providing ride-sharing services.
With Lyft and Uber in a near-constant state of expansion, it became clear that insurance companies would have to figure out how to adapt to the new business model sooner rather than later.
Several insurance companies already have taken steps in that direction. The company USAA announced in January it would begin a pilot program in Colorado, the first state to legalize ride-sharing companies, also known as transportation network companies. And Geico announced last month it was piloting a ride-sharing insurance policy in Virginia, where ride-sharing companies only recently received permanent legal status.
“Lyft drivers in Pennsylvania use their cars to get to school or to the grocery store, and also to give rides to people who need them,” Lyft spokeswoman Chelsea Wilson said. “For a long time, personal insurance products didn’t reflect this reality. With the availability of Progressive’s policy, we’re excited to see personal coverage that provides Lyft drivers insurance options designed with ride sharing in mind.”
Unlike the USAA pilot program in Colorado and the Geico pilot in Virginia, Progressive’s Pennsylvania pilot is for Lyft drivers only and excludes drivers for much larger rival Uber. An Uber spokeswoman declined to comment Thursday.
“We considered a number of factors, including input from Lyft, when choosing Pennsylvania to pilot,” Ms. Hendrick said. “We will assess the market response and customer experience before making decisions on expanding the program …”
The ride-sharing insurance policy will offer all coverage options available under a standard personal policy, Ms. Hendrick said. Those include liability, uninsured and underinsured motorist, comprehensive, collision and medical payment provisions.
If a driver has an accident that exceeds the limits of his primary coverage, however, Lyft’s insurance may provide excess coverage if it meets its criteria, she added.
As for the cost of the policy, Ms. Hendrick said the base rate will be close to a personal auto rate in Pennsylvania “and will be adjusted based on mileage driven as a TNC operator.”
Ms. Hendrick said no specific time frame has been set for the pilot program.
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