Uber

Auto insurance geared toward Uber and Lyft drivers is growing in prevalence in South Carolina. State Farm, the state's largest auto insurer, plans to begin offering coverage for ride-hailing services in March. (File/Jeff Chiu/AP)

South Carolina’s largest automobile insurer is putting customers on notice: Drive for Uber, and you won’t be covered.

In its renewal notices over the last few months, State Farm included language that makes explicit an existing rule. It says that drivers aren’t covered when they’re "carrying persons for a charge."

That is, picking up a passenger on Uber or Lyft.

But State Farm will soon offer that option – for a charge. The insurer plans to offer an add-on policy in March meant to cover ride-hailing services, bringing a growing insurance industry trend to far more South Carolina drivers.

This time last year, no auto insurers offered coverage geared toward Uber and Lyft drivers. Now, three of the state's five largest sell it.

That began to change last February, when GEICO and Allstate began to offer similar policies. Those two providers and State Farm account for about two-fifths of premiums written in South Carolina, state records show.

The idea is to give an extra layer of coverage for drivers picking up riders, on top of the insurance that car services already provide, said State Farm spokesman Roszell Gadson. How much insurers were charging for the "endorsements," as the add-ons are called, wasn't immediately clear. 

"This coverage is offered for policyholders who drive their cars for TNCs and may have unknown or unaddressed potential gaps in coverage," Gadson said, referring to transportation network companies.

The arrival of Uber in 2014 set off a flurry of questions about how the new app-based service should be regulated. And while the General Assembly legalized the model a year later, it’s still raising new questions.

Insurance represents one of the main ones as the industry races to keep up with how to handle personal vehicles that essentially double as taxicabs.

State law already requires Uber and Lyft to provide coverage when a driver has their apps turned on, the moment when personal policies typically drop off. But insurance companies say they want to give the services’ users an extra layer of security, in case they run into gaps.

"The goal of this endorsement is to help fill some of the coverage gap that can arise between a customer's personal policy and the commercial policy of Uber and Lyft," said Allstate spokesman Adam Polak. “We don't want them sitting there and worry and having to be an expert on what Lyft has and what's on their personal policy.”

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Uber and Lyft couldn’t immediately be reached for comment on what gaps their policies present.

Even so, the option appears to be catching on. Polak said about two-thirds of Allstate customers who drive for ride-hailing services have paid for the extra coverage, and an increasing number of insurers offer it.

Each of the state’s five largest auto insurers has tested the option somewhere, though two of them – Progressive and USAA – don’t offer it in South Carolina. Both have said they're looking at introducing the option in more states in 2017.

The S.C. Department of Insurance doesn’t keep a comprehensive list of companies that offer ride-sharing coverage, spokeswoman Ann Roberson said.

The growth of the new insurance model comes as the ride-sharing model becomes more and more commonplace and blurs the line between personal and commercial coverage.

Uber is nearing its third year in South Carolina, but with Lyft's arrival last year, the young industry appears poised to see more competition in the state. After it launched in Charleston in June, Lyft said Thursday it would match Uber's footprint in the state, adding service in Clemson, Columbia, Greenville, Myrtle Beach and Spartanburg as part of a new expansion nationwide.

Reach Thad Moore at 843-937-5703 or on Twitter @thadmoore.

Thad Moore is a reporter on The Post and Courier’s Watchdog and Public Service team, a native of Columbia and a graduate of the University of South Carolina. His career at the newspaper started on the business desk in 2016.