The new gig economy goes well beyond a way to hail a ride or book a room. It includes a diverse and growing number of individuals who work short-term or contract-based jobs — which are referred to as “gigs.” These gigs, coupled with ever-expanding mobile application software, have extended to grocery shopping, tutoring, craft making, and even dog walking. This gig revolution has developed over the past decade and caters itself to people seeking flexibility or self-employment compared to the traditional nine-to-five office job.
This new workforce is able to monetize or share their assets, whether that be their car or a spare bedroom, by connecting instantaneously to others seeking short-term rentals or services via digital platforms. This gig flexibility comes with a tradeoff, and that is the categorization as an independent contractor, or freelancer, without the full benefits or protections of a full-time employee.
The exact number of gig workers in the United States varies widely. The most recent government data available is from 2017 when the Bureau of Labor Statistics reported that 55 million people in the United States were gig workers — or 34% of the workforce — and this was projected to rise to 43% in 2020. Surely, the COVID pandemic has only increased this trend as many Americans were let go or told not to work in the past year. So, with all these people working as independent contractors it may not be apparent that their personal insurance policies will not cover claims that occur while performing a gig service for commercial purposes. The consequences of which include hikes in premiums, being dropped from coverage, or worse — like paying for injuries, medical bills, repairs, and excess property damage out of your own pocket.
Let’s take a look at ride-sharing gigs as an example. Uber does offer limited coverage for their drivers while also requiring their drivers to carry minimum amounts of auto insurance. However, Uber’s coverage depends on what stage of the app the driver or passenger may be using. For instance, the Uber driver is covered by their personal auto insurance when the app is turned off. But what happens when a driver theoretically drops off a passenger and gets in an accident as they are searching for their next ride? Do they fall under Uber’s limited policies or does their personal auto insurance kick in even though they are using their car for commercial purposes? With this constant bouncing back and forth between policies, it leaves many gaps in coverage where the driver may be liable and unfortunately stuck with the bill.
This new phenomenon has forced the insurance industry to adapt. Many carriers provide forms of supplemental gig insurance, but with the lack of historical loss information, it has been a slow process. So, whether you are sharing a car or home, walking someone’s dog, or delivering food, it is important to talk with your insurance agent and avoid the treacherous gaps in coverage while you are performing your gigs.
Article by Tyler Opel