The Risks Of Ridesharing: What You Need To Know

By Gibson - Oct 19, 2015 6:30:00 AM

RidesharingRidesharing is on the rise. If you haven’t heard of it, you will. The term ridesharing made headlines 30,528 times in 2014 alone. While 2014 was the year the world started to learn about these ride sharing services, 2015 is the year they have begun to pose a real threat to other forms of transportation.

With multiple ridesharing services in the works, Uber and Lyft stand as the front runners of transportation network companies (TNCs). The results are staggering. Uber, which started in 2009 as a small startup in San Francisco, is now a major enterprise operating in more than 200 cities and 53 countries. In the cities where these TNCs have joined the market, taxi ridership has declined anywhere from 10 to 30 percent. Meanwhile Uber’s rides have increased from 9 to 29 percent in the past year.

This mode of transportation is growing rapidly. It is important to educate yourself before using one of these services. Though ridesharing may not be popular or present in your city yet, you could encounter it as an option when you’re traveling in larger cities. Your kids may also be familiar with these services around college campuses or when they are out on the town.

How Ridesharing Works

These services operate through a smart phone app, giving you transportation at the press of a button. There are differences between each TNC, but the basic concept is the same. Once you download the app the process is fairly simple. Passengers are able to view the nearest available cars. Passengers then provide their location along with the address of their destination. A driver will confirm the ride. The app will display the driver’s route and estimated time of arrival, in addition to driver and vehicle information.

These services are popular in cities where there is increased traffic and difficult or expensive parking. They have also become prevalent around college campuses to avoid driving under the influence after a night out.

Passenger Risks

Are you safe when taking a ride from a ridesharing service? What risks could you be exposed to? How can you mitigate the risks?



Payment is done through the app; there is no exchanging of funds directly with your driver, which helps reduce risks. Even tips are included on the app. Following each ride you will receive a detailed receipt showing a map of your route. This is how you can confirm the fare paid matches the services received.


Who is picking you up? How can you identify the driver? Should you trust this individual? What background checks do they go through? Have they been trained or received special licensing?

Ridesharing is different from taking a taxi or a limo. For many states, drivers for TNCs are not held to the same licensing and insurance requirements as taxis or limos. Though as ridesharing grows in popularity, some states are beginning to take action and create legislation for drivers.

Lyft-Look-7Each TNC has a different process from screening, training, and licensing their drivers. Both Uber and Lyft state they require background checks for all drivers. The companies also have standards related to the vehicles drivers use such as requiring all vehicles to be a certain model year or newer. On Lyft’s website they even specify that vehicles must pass an inspection before they can be used.

Ultimately, like a taxi, there is no way to guarantee a completely safe ride. Even if the driver has gone through significant background checks, you are still putting yourself at risk. Personally, you can take the following precautions to increase the safety of your ride:

    • Match reservation information BEFORE you get in the vehicle. The app will provide the driver’s name, picture, license plate number, and car make/model.
    • You can view the car’s location as they travel to pick you up. This helps you ensure that it is the correct vehicle.
    • Many of the cars will have an emblem on display to identify them as an Uber or Lyft driver. For Uber, it is generally their logo on the windshield, while Lyft uses a pink mustache.
    • When the driver arrives, ask them to confirm their name and who they are there to pick up.
    • Avoid traveling alone. Use the estimated arrival time tools within the apps to let your friends and family know when you are to arrive. If you are late, they will know something may be wrong.


What happens if an accident occurs when you’re in the car and your driver is at fault? Will they have enough coverage to handle any medical expenses you experience?

The short answer: it’s complicated. TNCs like Uber and Lyft do carry $1 million of liability coverage and $1 million of uninsured/underinsured motorist coverage. But it can be unclear if the ridesharing company’s policy will step in first or that of the driver. A driver’s personal automobile insurance will not cover any incidents while the vehicle was being used for commercial uses - a commercial auto liability policy would be needed.

As ridesharing grows, some states are beginning to enact laws to set standards for TNCs, including insurance requirements. There are also cases currently being tried regarding ridesharing, accidents, and who is to be liable – the results of these cases will help shine light on how incidents will be handled in the future. Check out articles in Money Magazine and by the Insurance Information Institute for recent discussions on these issues.

Driver Risks

What if one of your family members is interested in becoming an Uber or Lyft driver? The services make it seem very easy and appealing to become a driver. But it is essential to understand how the service operates and the risks drivers can encounter before starting down that path.

In particular, potential drivers need to look into the insurance components of joining the ridesharing service. Is their current automobile coverage sufficient? Does it exclude times when vehicles are being used for commercial purposes? It’s very likely not covered if it’s a personal auto policy. What insurance does the company provide for them and is it enough? What happens if they are injured by a motorist with insufficient coverage? Talk with your insurance advisor before becoming a driver for Uber, Lyft, or another ridesharing service.


With the projected growth of ridesharing, the likelihood of you or your kids encountering these services is high. Before you or your family members use Uber, Lyft, or another service, take time to understand how it works, what the risks are, and tips to ensure your safety.


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