Why Gig-drivers are Overpaying for Non Platform Coverage?

Why Gig-drivers are Overpaying for Non Platform Coverage?

In the rapidly evolving landscape of transportation, rideshare drivers have become an integral part of our daily lives. However, there is a glaring issue that needs immediate attention: these drivers are overpaying for their non-commercial activities. To substantiate this claim, we turned to the U.S. Department of Transportation’s Federal Highway Administration's annual report, which provides comprehensive data on motor vehicle registrations, average car mileage, and more.

According to the 2021 survey, an average of 62% of annual miles driven with a personal vehicle are for commuting to work. This statistic is crucial when considering traditional insurance models, which often base premiums on the assumption that most driving is for commuting purposes. However, this is not the case for gig drivers. For them, driving is not a means to get to work; it is their work.

Here are our main key takeaways from this survery:

  • On average, 62% of annual miles driven with a personal vehicle are to commute to work
  • Most gig-drivers don’t commute to work - driving is their work. 
  • The majority of TNC mileage is during periods 2 & 3 of TNC work, covered through mandated platform commercial policies.
  • The result: Gig drivers are paying more per mile of actual risk exposure.

Transportation Network Companies (TNCs) like Uber and Lyft mandate commercial policies that cover their drivers during periods 2 & 3 of TNC work. Period 2 starts when the driver accepts a ride request and goes to pick up the passenger, and Period 3 is when the passenger is in the car. Most of the mileage accrued by TNC drivers occurs during these periods, and they are covered by the platform's commercial policies during this time.

Herein lies the crux of the issue: gig drivers are paying more per mile of actual risk exposure. Traditional insurance models are not designed to differentiate between commercial and non-commercial activities adequately. As a result, rideshare drivers end up paying premiums calculated on outdated models that do not reflect the actual risks they undertake.

When a rideshare driver is not engaged in TNC work (Period 1), they are essentially driving for personal reasons—be it for grocery shopping, visiting friends, or any other non-commercial activity. However, their insurance premiums do not adequately reflect this reduced risk profile. They are, in essence, overpaying for the miles driven during non-commercial activities, as these miles carry significantly less risk compared to their commercial activities.

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