Active in the on-demand economy? There’s something you need to know about insurance: You’re not covered.
But how can that be? You have an insurance policy! The problem is, your personal insurance policies have restrictions and exclusions when it comes to using your home, car or tools for business purposes, or providing personal services.
For example, your personal automobile policy specifically prohibits using the vehicle to carry passengers or property for a fee. You’re a rideshare driver? No coverage. You’re providing on-demand delivery? No coverage.
Similarly, homeowners policies will narrowly define what a home-based business is, and then go on to restrict coverage for that home-based business. You’re a homeshare host, a dog-boarder or personal services provider? You’re not covered.
It’s not that policies have unequivocally clear exclusions. Some limited business activities are covered, while others are not. But how could you ever know? A friend in the insurance industry remarked to me that on-demand service providers are indeed covered, they’re just not properly covered. Well, having coverage that simply isn’t proper coverage is like having a mesh roof on your house –– it’s pointless. Insurance is about peace of mind and that can’t exist unless you know for sure that you’re protected from peril.
Where can you find the right coverage?
Many on-demand platform providers include a certain level of coverage for their participants. However, these policies have a number of complications. The common rideshare platform policy provides protection for “Named Operators.” The key deficiency is that “Named Operators” are not “Named Insureds.” They don’t have any policy rights and can’t submit claims directly to the Insurer.
In addition, the limit of liability is usually only $1,000,000, which is insufficient to protect against the exposure of carrying paying passengers. If a serious accident resulted in death or catastrophic injury to one or more passengers, the damages would easily exceed $1,000,000 and you won’t be covered.
Homeshare platforms also offer protection for their hosts, most commonly a $1,000,000 premises liability policy. A critical issue with this type of protection is the aggregate limit of liability, which is the maximum combined value of all claims in a single policy period. If the aggregate is also $1,000,000 (and premises liability policies commonly have the same single and aggregate limit), it is insufficient. There are hundreds of thousands of hosts providing millions of rental nights a year sharing those policy limits. That volume of activity will easily generate enough claims to exceed $1,000,000. What if your claim occurs after the annual limit of insurance has been exhausted? You guessed it –– you’re not covered.
This problem is only compounded by the same situation that exists with rideshare coverage: hosts are not “Named Insureds” and therefore have no contractual rights to coverage. Furthermore, as owner of the policy, it’s the platform that decides which claims are presented to the insurer, not the host.
From a physical damage perspective, homeshare platforms provide varying guarantees to hosts promising that the platform will pay for any damage caused by a guest. That’s not an actual insurance policy and although there may be security behind it, the obvious question is: what happens when those claims are frequent and numerous? The platform is not an insurance company. Will it be able to manage all of the losses?
Personal services create less exposure to the on-demand worker, but are even more complicated when determining if a homeowners policy will provide coverage. One thing a homeowners policy will not cover is “bailee-for-reward” –– someone who earns money by caring for other people's property. So you're a dog-boarder? You're not covered.
What can you do?
The simple answer is to buy a commercial insurance policy. Unfortunately, that option comes with a whole other set of problems. Traditional commercial policies are based on the assumption that the “Named Insured” is a full-time business earning full-time business revenue. This means minimum premiums of $1,500 to $2,500 for non-auto businesses and as much as $5,000 or more for rideshare and delivery. Considering the average homeshare host earns $4,000 per year and most rideshare drivers work less than 20 hours a week, these policies are prohibitively expensive for on-demand businesses.
The other problem is that it's very difficult to buy a traditional commercial policy. Firstly, many insurers won't offer coverage to businesses with less than three years of operations. Secondly, the application process is lengthy, invasive and cumbersome.
There is a solution!
Slice will provide on-demand, pay-per-use insurance for your work in the on-demand economy. It's acquired with the tap of a smartphone app and billed directly to your credit card. It couldn't be easier! Best of all, it works the way you work in the on-demand marketplace –– you only pay for the insurance you need, when you need it.
You’re a rideshare driver, homeshare host or a personal services provider? With Slice, now you're covered!
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