Business & Tech

Insurers pitch extra coverage for Uber and Lyft drivers

Uber driver Dean Johnson waited for a customer outside South Station last year.
Craig F. Walker/Globe Staff
Uber driver Dean Johnson waited for a customer outside South Station last year.

Insurance companies know that many of their drivers are working for Uber and Lyft on the side but are keeping it on the down-low.

So they are rolling out insurance coverage designed specifically for ride-hailing drivers, hoping to draw them out of the shadows and into a policy.

For a higher price, of course.

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Last week, Allstate Corp. introduced its Ride for Hire optional add-on coverage in Massachusetts. Mapfre Insurance, the state’s largest auto insurer, launched its expanded automobile policy for Uber, Lyft, and other ride-hail drivers earlier this month. USAA, an insurance company geared to military members and their families, has been offering coverage for such drivers in Massachusetts since last year. And several other companies, including Plymouth Rock, are planning to provide this type of insurance in the coming weeks.

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The additional insurance typically covers the period when a driver has turned on the ride-hailing app and is waiting for a customer. Once the driver accepts a fare and picks the customer up, Uber and Lyft provide their own coverage.

The new policies typically cost under $100 a year, on top of the usual auto premium.

Still, for insurance companies, the question remains: Will the drivers, who have been tight-lipped for years about their driving gigs — for fear that the company will raise the rates or drop them entirely — fess up and buy these new policies?

“I don’t know how the industry is going to sell it,” said Chris Russo, president of Russo Insurance Agency in Medway. “A lot of the drivers are cowboys. They look at it as ‘I’m paying enough for insurance; do I want to add another 7 percent?’ ”

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The average premium paid by Massachusetts drivers was $1,108 in 2014, the most recent data available.

Many started driving for companies like Uber and Lyft without checking with their insurance companies, using their personal cars to haul passengers. Traditionally, that would trigger a requirement for commercial insurance costing thousands of dollars more a year.

The ride-hailing companies clarified their insurance coverage only in 2014, after they had signed up thousands of drivers. And in recent years, insurers have specifically included language in their policies notifying drivers they won’t cover accidents that happen during a ride-hailing trip.

That’s created a bit of a cat-and-mouse game with insurers and drivers.

On message boards, drivers warn of the possible repercussions of informing an insurer that a car is being used for business.

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Massachusetts law has no prohibition against insurance companies dropping drivers who work for ride-hailing companies. But some, such as USAA, said they don’t drop drivers who work for Uber and Lyft.

The Uber/Lyft phenomenon has forced insurance companies to get more vigilant.

Many companies now ask drivers, when they apply for insurance, if they moonlight with ride-hailing apps. Others look for hints that drivers may be doing so, based on whether they lease their cars from companies that commonly do business with ride-hailing drivers.

After an accident, claims adjusters are likely to ask the driver and passengers whether they used a ride-hailing service and to look for clues in the police report, according to officials.

Mapfre has denied a small percentage of claims after discovering that drivers were working for a ride-hailing service, said John Kelly, senior vice president for the insurer’s Northeast region.

Insurance companies and agents said they’ve gotten questions from customers about whether their personal auto insurance policies cover ride-hailing.

“I’ve had people call me and say, ‘Am I covered if I drive for Uber or Lyft?’ ” said Jillian Hanley, who owns an Allstate insurance agency in South Boston. “I would suggest they needed commercial coverage . . . They’d say, ‘Oh, I don’t drive for Uber,’ ” and hang up.

Hanley said she hopes Allstate’s decision to offer an extended policy covering the period when a driver is waiting to accept a ride will bring more of them out of the shadows. Allstate’s policy also can help drivers offset deductibles when they are on the ride-hailing company’s insurance.

“I’d like it to be a better situation than it is,” said an Uber driver from Newton who declined to provide his name, because he was worried that his insurer would raise his rates. He said he would consider getting gap coverage, but he doesn’t know if it’s worth it.

In the Boston area, drivers sometimes sit idle on the ride-hailing platform for brief periods. On a recent Friday, the driver said, he spent 5½ hours driving for Uber, and was only waiting to pick up customers for about a half-hour during that time.

“I’d be paying a premium on my insurance for a relatively narrow period of time,” he said. “The devil is in the details.”

Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.