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Private car insurance prohibits carrying passengers for hire or reward;
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1 in10 comprehensive car insurance policies exclude lift-sharing.
The warning comes following a review of 238 private comprehensive car insurance policies*, which revealed that:
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All private car insurance policies prohibit ‘passengers carried in the course of a business carrying passengers’ or for ‘hire or reward’ - so, drivers of taxi-hailing app services such as Uber need taxi insurance;
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Where private car insurance permits lift-sharing, it is restricted to social journeys and drivers are prohibited from making a profit;
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10% of policies specifically exclude cover for lift-sharing.
Taxi service apps
Taxi-hailing apps, such as Uber, connect passengers directly with drivers through a mobile phone app, rather than using a centralised booking service like a traditional private hire cab service. Customers using the service book and pay for lifts through the app. While Uber does not consider itself as operating a taxi service, insurers do and require Uber drivers have appropriate taxi insurance.
Lift-sharing – contribution to costs, not profit
Drivers offering lift-shares under a comprehensive car insurance policy are only permitted to ask passengers for a contribution towards fuel and other running costs. They must not profit from the arrangement, otherwise their insurer would treat them as a business - operating as a passenger service for hire and profit. This could invalidate a private car insurance policy. Lift-sharing is also not permitted in a vehicle seating more than eight passengers.
In addition, drivers need to make sure that they are insured for the journeys they make. Most car policies cover social, domestic and pleasure use which includes commuting to your main place of work. However, if you drive to branch offices or business meetings, then cover will need to be extended to include business use. Typically this will also cover car sharing with work colleagues.
Gocompare.com Car Insurance’s spokesman, Matt Oliver, commented: “If you’re thinking of using your car to make money through Uber or other ride-sharing apps, you will not be covered by private car insurance.As you will be effectively running a business, you’ll need commercial private hire vehicle insurance offering cover for hire or reward.
“Drivers simply looking to cut their commuting costs by joining a lift-share scheme should also check with their insurer before signing-up any passengers. While most comprehensive private car policies permit lift-sharing, a significant minority don’t. Drivers also need to be careful to only ask passengers for a contribution towards the cost of the journey. Otherwise they could be classed as using their vehicle for ‘hire or reward’ which could invalidate their insurance.”
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