There are many good reasons to carpool. Maybe you share rides with co-workers to save money on fuel costs or to reduce your carbon footprint. Or you and other parents might carpool your kids to school, sporting events or activities. You might even carpool with friends to the mall, book club or vacation. No matter why you carpool, it could affect your auto insurance rates.
Personal or Business Coverage?
Many personal auto insurance policies include a restriction that voids liability coverage if you use your personal vehicle for livery or public conveyance. Simply put, that means you can’t use the liability coverage on your auto insurance if your vehicle is in an accident while you rent it out or use it to operate a taxi service.
This restriction against commercial or business use is in place because commercial drivers are at greater risk for accidents. They drive more miles, are exposed to heavier traffic flows, regularly navigate poor weather conditions and face increased pressure to meet tight delivery deadlines compared to drivers who use their vehicles solely for commuting, errands, vacations or other personal uses.
However, this exclusion does not apply to carpools, driver groups or ride share situations. Even if you accept money in exchange for rides, your carpool is typically not considered a commercial enterprise because that cash pays for fuel and upkeep on your car.
Do You Have Enough Liability Coverage?
Accidents do happen, and your liability will be even higher after a carpool accident because you have passengers for whom you are responsible. Increase your liability coverage and purchase an umbrella policy to protect your financial assets in case you’re in an accident and are sued by one of your passengers. The cost is relatively small compared to the protection and peace of mind you receive.
Consider increasing your medical payment coverage, too. It pays for medical treatments your passengers need after an accident. Increase coverage based on the number of passengers in your carpool.
Bump up your underinsured and uninsured coverage as well. That coverage goes into effect if you or any family members are injured while riding in a carpool driven by someone else. After that driver’s policy limits are reached, your underinsured and uninsured coverage can pick up the difference.
You’ll also want to make sure that anyone who drives your vehicle has your permission to do so. That way, your liability coverage will pay for any accidents that driver causes.
Carpooling gives you several benefits. Before you get started, talk to your insurance agent and make sure your auto insurance policy covers your carpool.
