Brokers: how to advise rideshare drivers on their deductibles

Drivers working for rideshare and delivery companies must be careful when setting deductibles on personal auto coverage. And they need to make sure their personal insurers know they’re doing rideshare work and carry the appropriate endorsements.

A lot of drivers set their personal auto coverage deductibles around $1,500. But, notes Edward Walker, shared economy practice leader at Hub, rideshare companies – or transportation network companies (TNCs) in industry parlance – commonly set theirs at $2,500.

So, even drivers who carry rideshare endorsements that allow shifting of certain claims to their personal auto coverage will sometimes be responsible for paying their personal lines deductibles for some auto physical damage claims.

“The advice I usually give drivers in that context is to be a little smarter about it,” he says. “Everybody’s cost-conscious these days. Your collision deductible is by far your most expensive. Your comprehensive [deductible] is a much cheaper deductible to adjust.”

He says TNC drivers trying to save money by tweaking various deductibles should not ‘play games’ with the collision side of their coverage and keep the deductible around $500.

“But when it comes to comprehensive, if you still want to apply that methodology to saving a little money, you can work with the comprehensive deductible…on [an insurer’s] website and not make as drastic an impact,” he tells CU.

But, be careful

Although adjusting a driver’s comprehensive deductible doesn’t reduce premium as drastically as raising the driver’s collision deductible, it still helps save money if a client is keen to do so.

“Comprehensive claims just aren’t as frequent. The case I give [when] people ask about comprehensive [is], if your car’s parked in your garage, and the garage collapses on it,” Walker explains.

“Keep the collision in a very risk-averse place at $500. The comprehensive is where you can [make adjustments] if you must lower the price…. It will have less of an impact on your day-to-day life.”

But, he stresses, this shouldn’t be a routine recommendation to clients. It’s a piece of advice that can be offered to people who are looking to make adjustments to save money. It’s important to be clear clients will be responsible for the deductible if a comprehensive claim does occur, because they do happen.

Digital dilemma

To some extent, drivers’ willingness to take on unnecessary deductible risk is driven by an intersection between the rising cost of living and digital insurance platforms that let customers instantly see the changes that come with these adjustments.

“We are in a tough market. People do have a duty to defend their wallet. So, in those situations, [someone should ask themselves] if they’re risk-averse or would like to take a few chances.”

For gig workers, though, it’s important to actually speak with a broker or other intermediary. “If they just give me a little box that says, ‘Am I a rideshare driver?’ and I click it and it jumps the premium up by X amount, and then I click it off and it drops back down, I may say, ‘Oh well, why would I ever do that?’ I think that is too simple of a process.

“If you’re a gig driver, you really need to step up your own due diligence and keep your autonomy as a business owner [who is] delivering goods and services with a vehicle. [That’s the best way to protect] your livelihood [and] stay afloat.”

Feature image courtesy of iStock/MarianVejcik