Stuck and can't find a cab? Using a phone app for a ride-sharing service, you can summon a ride, entering where you are and where you want to go, and a driver picks you up in minutes. You pay with a credit card through the app, eliminating worries about having enough cash on hand. If your kids live in a big city, they probably know about ride-sharing outfits like Uber, Lyft or Sidecar, if they haven't already downloaded one of the apps. The San Francisco-based transportation network companies have taken off across the U.S. -- the five-year-old Uber, for example, is in 43 countries. The appeal, especially to the young, is easy to understand. Drivers age 21 and older with insured cars and clean driving and criminal records can make extra money working for the services, using their own cars and working whatever hours they choose. "It's a very popular and innovative approach to an age-old business of transporting people for money," says James Whittle, the American Insurance Association's chief claims counsel.
But insurance and regulatory concerns abound. Unlike taxi companies, which are highly regulated, the rules of the road are not yet spelled out for ride-sharing businesses. Regulators and insurance industry officials warn consumers to understand the risks involved when riding with or driving for transportation network companies. And if your child has a car and is making money driving people around, you might have cause for alarm. Under the so-called livery exclusion, a personal auto insurance policy does not provide coverage when you use the car to transport people for money. If you (or your child) get in an accident while driving for a transportation network company, your personal auto insurance likely won't cover the claim. "They need to understand the risks and the obligations they may be assuming," Whittle says. "There may be insurance gaps, and those gaps could affect you as a passenger and as a driver."