Many workers these days are using their own cars to make extra money by driving passengers around or delivering food. But have you checked your coverage with your auto insurance company?
Some gig drivers find out the hard way, after an accident or other incident, that their car is not covered while working. Rosie Achenbach and her dad are among them. They have received a costly lesson in what can happen if you have an accident as a gig driver.
"Basically, I clipped the back end of his vehicle," she said, "and damaged the front of my car."
Dad Steve Achenbach thought that food delivery would be a good way for Rosie to earn extra college money. But neither of them were aware that using her car for business meant their insurance would not cover her in an accident.
"When we called after the accident," he said, "they explained to me that essentially because she was a driver for hire, that it was an exclusion from our policy that I wasn't aware of. We had no idea, given how easy it was to sign up to be a driver."
The delivery company paid to fix the other driver's truck, but the Achenbachs were on their own for thousands in repairs to their Honda.
"It ended up costing us $8,000," Steve Achenbach said.
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What gig drivers need to know
Caitlin Constantine is an insurance specialist with NerdWallet and says many gig drivers are a fender bender away from a similar surprise. She says anyone using a personal vehicle for commercial purposes must be upfront with their car insurance provider.
In a worst-case scenario, she says, "They may end up canceling your policy."
Even if your ride-booking or delivery company carries insurance, those policies usually won't kick in until you're carrying a passenger or delivery order or you are en route.
"So that means that while you're driving around waiting for a request to show up on your app, you're actually not covered by their policies," she said.
With some gig companies, their insurance will only cover damage to the other driver's car, not your car. That is why you need to know what coverage you have.
One option is adding ride-booking coverage to your personal policy, which NerdWallet says usually costs between $9 and $25 per month.
One downside, though, is not all insurers offer ride-booking coverage.
"It's not even available in all states," Constantine said. "And if that's the case, then you're gonna need to look into commercial auto insurance."
So if you drive your car to earn money, make sure you're covered before you head out on your first gig, or you could end up paying more for repairs than you earn in a year.
"With how much cash we ended up spending, it ended up not being worth the little bit of money I was making," Rosie Achenbach said.
