1099, Insurance, Retirement, Taxes

Retirement Saving Calculator

Whether you are a Gen Yer or on in years, it’s important to invest in your retirement. This could entail a Sep-IRA or other investment vehicle. This retirement calculator will help you figure out how you can meet your financial goals.

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Freelancers, Insurance, On Your Own, Uber

Insurance Options for On-Demand Drivers

Ridesharing is a phenomenon that is popping up in new cities every day. And to keep up with the demand, more and more workers are signing up to be drivers for on-demand car sharing and delivery companies such as Uber, Lyft and InstantCart. You can’t be work for one of these companies, however, unless you know your insurance options.

Independent contractors for such companies can make a considerable amount of income, even supplementing full time salaries. However, one of the primary concerns is insurance. Drivers use personal cars and are not considered employees of the companies. Therefore, the protection and liability coverage can be a bit confusing. If you’re are a on-demand driver or considering becoming one, read this guide first and understand what you are and are not protected against:

Is insurance provided by the company and if so, what kind?

In short, the answer to this question is yes. But it does get complicated. Drivers are protected in some ways if using their car for the purposes of transporting clients but the amount and level of insurance depends on what they are doing. The categories or stages typically consist of:

  • Logged into the app and waiting for pick-up requests
  • On way to picking up a passenger/client
  • Transporting a passenger/client to destination

The major ridesharing companies offer some level of protection in each of these stages but they vary. Let’s take a closer look by company:

  • UberX:
    • Logged into the app and waiting for pick-up requests: Contingent liability coverage (50/100/25 limits); covers losses not covered by driver’s personal policy
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial Liability insurance ($1 million limit)
      • Uninsured bodily injury ($1 million limit)
      • Contingent comprehensive and collision coverage ($1000 deductible)
      • Minimum amount of personal injury protection coverage (if required by law)
  • Lyft:
    • Logged into the app and waiting for pick-up requests: Contingent liability coverage (50/100/25 limits); covers losses not covered by driver’s personal policy
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial liability insurance ($1 million limit)
      • Uninsured bodily injury ($1 million limit)
      • Contingent comprehensive and collision coverage ($50,000 limit and $2,500 deductible).
  • Sidecar:
    • Logged into the app and waiting for pick-up requests: Collision insurance ($50,000 limit and $500 deductible); covers losses not covered by driver’s personal policy. Note: Policy may differ in California, Washington State, and Chicago
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial liability insurance ($1 million limit)
      • Collision insurance ($50,000 limit and $500 deductible)
      • Policy may vary in Washington state and Chicago

Keep in mind that when your car is used for personal driving, there is no insurance provided under all companies.

What insurance should I purchase myself?

As a driver, you should have auto insurance whether or not you are using it for business. Some ridesharing companies say that a personal insurance policy along with their supplementary coverage is enough coverage. However, this area is still very gray, particularly when you are using your car for business. Consider these policies:

  • Commercial car insurance: Many states require ridesharing drivers to purchase commercial car insurance so it’s important to understand the rules and regulations of your state. This insurance is typically required for taxis and many states consider rideshares to be under the same category. You do need a commercial driver’s license to purchase commercial car insurance.
  • Policies targeted toward ridesharing drivers: With the rise in on-demand ridesharing, many insurance companies are now experimenting with policies specially geared toward these drivers. Ask your insurance company about their policies.

What else do I need to know to stay protected?

If you are a driver for a ridesharing company, it’s important to understand your rights and how your are protected. Drivers are considered independent contractors, not employees, and so protection is typically limited. Depending on your budget, purchase an insurance policy that can cover you as much as policy. Rules and regulations for ridesharing companies and drivers are constantly shifting. It’s important to stay up to date to keep your protected in any situation.

Related Articles

Uber Car Insurance
Being Freelancer, Espanol, Insurance, On Your Own, Self-Employed, Your rights: Presidential Election, Laws, etc.

Insurance for the Ride Sharing Services’ Drivers

Originally from WalletHub

Ride-hailing services like Uber have grown rapidly and signed up thousands of drivers. Insurance for these Ride Sharing Services’ Drivers is important. As a driver, make sure you have it and that you are your passengers are protected

Some important things to remember:

  • Vehicles are used for both personal and business use.
  • Companies do not consider the drivers to be their employees.
  • Vehicles are owned by the drivers, not the companies.

This leaves drivers in a gray area between personal car insurance policies that exclude coverage for business use of a vehicle, on the one hand, and (much more expensive) commercial insurance policies that assume the vehicle is used exclusively for business purposes on the other.

An additional complicating factor has been the ride-hailing companies’ initial reluctance to take responsibility for insurance liability. That said, the companies now do provide a certain level of insurance to their drivers, and insurance companies are creating insurance products to specifically serve this market.

Insurance Provided By Ride Hailing Companies

People who drive for Lyft, Sidecar and UberX use their own private vehicles, and when they are using their vehicles for personal use, the ride-hailing companies will take no responsibility for things that go wrong. So any accidents will be covered by the driver’s own policy if the car is being used for personal driving.

Once the driver turns on the smartphone app that’s used to communicate with riders, some level of insurance kicks in, but that coverage depends on what stage you are in the process of offering rides to customers. The table below details how insurance works with each of the major companies at each of the stages of the ride-hailing process.

Lyft Sidecar UberX
Not Logged In:
Personal Driving
No insurance provided. Driver only covered by personal insurance policy.
Logged In & Waiting For Ride Request Contingent liability coverage with 50/100/25 limits provides secondary coverage that pays only for losses not covered by driver’s personal policy Collision insurance with $50,000 limit and $500 deductible provides secondary coverage that pays only for losses not covered by driver’s personal policy

In California: Liability coverage with 50/100/30 limits

In Washington state: Liability coverage with 100/300/25 limits; Uninsured/underinsured motorist bodily injury coverage with 100/300 limits

In Chicago: Liability coverage with 25/50/20 limits; Uninsured/underinsured motorist bodily injury coverage with 25/50 limits

Contingent liability coverage with 50/100/25 limits provides secondary coverage that pays only for losses not covered by driver’s personal policy
En Route To Pick Up Passengers

or

Driving Passengers

Commercial liability insurance with $1 million limit

Uninsured/underinsured bodily injury with $1 million limit

Contingent comprehensive and collision coverage with $50,000 limit and $2,500 deductible (only for driver’s with personal comprehensive and collision coverage)

Commercial liability insurance with $1 million limit

Collision insurance with $50,000 limit and $500 deductible provides secondary coverage that pays only for losses not covered by driver’s personal policy

In Washington state: Uninsured/underinsured motorist bodily injury coverage with 100/300 limits

In Chicago: Uninsured/underinsured motorist bodily injury coverage with 25/50 limits

Commercial liability insurance with $1 million limit

Uninsured/underinsured bodily injury with $1 million limit

Contingent comprehensive and collision coverage with $1,000 deductible (only for driver’s with personal comprehensive and collision coverage)

Minimum level of personal injury protection coverage where required by law.

More Information For Drivers Terms of service

Summary of insurance

Terms of services

Summary of insurance

Terms and conditions

Summary of insurance

Source: Lyft, Sidecar and Uber websites as of June 2015

Note that Uber offers several other services including UberBlack and UberTaxi that work differently from the more popular UberX vehicles. Drivers for these services have commercial driver’s licenses and carry their own commercial insurance policies, which fully cover themselves and their passengers, and fulfill the livery insurance requirements of their state.

The Insurance Coverage You Should Buy

In order to drive for any ride-hailing company, you must purchase a car insurance policy. But what is the right kind of policy? There are three options:

  • Personal car insurance. The ride hailing companies insist that, given their supplementary coverage, a personal car insurance policy provides a sufficient level of coverage. Most car insurance companies – and some state and local regulators – disagree. Personal car insurance typically excludes coverage for any business use of your vehicle, and you risk having your insurance dropped or a claim denied if the insurer finds out you’re hiring out your car. Unfortunately the ride-hailing companies don’t provide any guidance on what types and levels of coverage to buy, other than to meet the state minimums. But make no mistake, if you drive for one of these companies you are taking on additional risk, both when driving for personal reasons and when logged in to the app and waiting for a fare.
  • Commercial car insurance. Traditionally, taxis and other vehicles being driven for business purposes have been covered by commercial insurance policies, and as rules and regulations for these new services get hashed out, some states and cities have ruled that ride-hailing drivers must purchase commercial insurance. So one way to play it safe is to purchase a commercial policy instead of a personal one. But this is impractical for most drivers, since it would mean first getting a commercial driver’s license, and, according to the National Association of Insurance Commissioners, these policies tend to cost between $5,000 and $7,000 per year.
  • New policies tailored for ride-hailing drivers. Many insurance companies are carefully testing the waters with policies designed specifically for ride-hailing drivers. If you live in one of the 12 states in the table below, this type of insurance is available from at least one insurer.
    State Insurer Companies Served
    Arkansas Farmers All
    California Metromile Uber
    Colorado Farmers All
    USAA All
    MetLife Lyft
    Georgia GEICO All
    Illinois Erie All
    Metromile Uber
    Indiana Erie All
    Maryland GEICO All
    Pennsylvania Progressive Lyft
    Texas USAA All
    GEICO All
    Utah Farmers All
    Virginia GEICO All
    Washington Metromile Uber

Tips For Staying Safe And Providing A Secure Ride

  1. Budget for insurance costs. As you calculate what you think you’ll earn as a ride-hailing driver after expenses, make sure to factor in realistic costs for the insurance you must purchase.
  1. Look out for number one. Ride-hailing companies consider their drivers to be independent contractors. This is a clear signal that you need to understand your own risks and to take steps to protect yourself and your finances.
  1. Stay on top of the news. This is a rapidly changing market. Companies have improved their coverage to address the concerns of regulators. State laws are changing. And today’s trial offerings from insurance companies may become mainstream products in the near future.
  1. Read the fine print. If you have concerns about the insurance provided by the ride-hailing company you’re planning to join, read the terms and conditions carefully and contact the company with any questions you have.
  1. Get the most insurance you can afford. If you’re responsible for an accident that costs more than your insurance will cover, you’re still financially responsible for the full loss. If you don’t have enough insurance, you could be putting your home and your savings at risk.
  1. Seek advice from others. Local independent insurance agents the community of local drivers may know about affordable insurance options you should consider.
1099, Being Freelancer, Companies, Finding Jobs, Freelancers, Future of Work, Income, Industry Research, Insurance, News, On Your Own, People, Self-Employed, Uber, Your rights: Presidential Election, Laws, etc.

Portable Benefits for the On-Demand Worker

The emergence of the gig economy has opened an important debate about having portable health and other benefits for the On-Demand Worker. There has been a number of calls for a new category for those who occupy the gray area between employees and independent contractors. Freelancers often work through a middle man or a marketplace (think Upwork.com or 99Designs) or an intermediary, typically an “app,” that customers use to identify themselves as needing a service—for example, a car ride, landscaping service, etc. This enables the employer to maintain some sort of arms-length distance from the worker. (We all know this is often broken, however). How can you work for someone without them giving you some sort of direction?

It’s increasing, but today it appears that at least about 600,000 or .4% of the US Workforce work with an online intermediator. The Hamilton Project at Brookings (I once interned there while I was a student across the street at Johns Hopkin’s University’s SAIS program across the street), recently hosted a gig economy event where Brookings made a proposal for  Modernizing Labor Laws in the Online Gig Economy. The talk focused on health and other benefits, and how to ‘force these new forms of work (from Uber, etc.) into a traditional employment relationship could be an existential threat to the emergence of online-intermediated work, with adverse consequences for workers, consumers, businesses, and the economy. “One of their One of the key benefits they proposed was portable benefits, which is a fascinating idea because (Independent contractors tend to have multiple gigs at one time). Their definition:

As we are defining it, the online gig economy involves the use of an Internet-based app to match customers to workers who perform discrete personal tasks, such as driving a passenger from point A to point B, or delivering a meal to a customer’s house. Note that this definition excludes intermediaries that facilitate the sale of goods and impersonal services to customers, such as TeacherPayTeachers.com, a Web site where teachers sell lesson plans and other non-personal services to other teachers, and Etsy.com, a Web site where individuals sell handmade or vintage goods. It also excludes Airbnb, a Web site where people can rent apartments, houses, and other accommodations.

The authors of the Hamilton Report highlight that ‘because it is conceptually impossible to attribute their (workers’s) work hours to any single intermediary.” Today, these independent workers do not qualify for hours-based benefits, including overtime or minimum wage requirements. These independent contractors rarely, if ever, qualify for unemployment insurance benefits. If intermediaries could pool independent workers, however, for purposes of purchasing and providing insurance and other benefits at lower cost and higher quality without the risk that their relationship will be transformed into an employment relationship, then they might be open to pooling their resources and having portable benefits for the contingent workforce.

The Ubers of the worls could then save on the costs if they have to eventually hire these workers full-time and on legal fees (although Uber has changed their driver terms of service agreement that bars drivers from participating in class action lawsuits against the company and instead requires them to enter into arbitration in the case of disputes).

As Steve King points out in his short analysis of this proposal, this new portable benefits law probably should include gig economy workers who work in the B2B sector, or sell goods, or rent real estate, but they do. But even though they are excluded from their analysis, they would likely be included in any portable benefit laws. Portable benefits seems to be a hot topic. Next week the Aspen Institute is holding a workshop on portable benefits.

Protection of the 1099 is important. I have heard of companies (the employer and the intermediary) using algorithmic scheduling to ensure their works never go beyond 29 hours of work a week, which ensures they don’t have to pay them health benefits or provide the other goodies full-time employees receive. It’s important to figure out how to address this barrier to benefits.  Ouch! Talk about Big Data hurting the worker!

Another reason to address this is that Brad Smith, the CEO of Intuit and one of the best leaders I have ever worked for, has indicated that his company’s data data shows that 40% of their self-employed customers also have income from a W2 job. (I know several people who wear these two hats). So this problem of multiple employers with different tax and benefit regimes started way before the Ubers, Lyfts, Instacarts came on the scene.

Portable Benefits basically means a person should be able to use the same benefits when they work for different on-demand companies. The Hamilton proposal is a start – it has accelerated the discussion about a new class of employees or at least the call for examining how workers are currently classified. Their proposal really doesn’t focus on online or offline, but instead stresses that workers should be protected and receive benefits. As the chart below indicates, this will continue to become an increasingly important issue to address in our On-Demand Society.

You can read The Hamilton Report here

Freelancers, Health Care, Insurance, Self-Employed

The On-Demand Society’s Need For Benefits Is Being Heard

While the on-demand society and the companies who hire freelancers have been growing rapidly over these past few years, it hasn’t been without controversy. The flexibility of being an independent contractor has it’s perks. However, one of the biggest drawbacks is the lack of benefits but most freelancers need it.

The upside of hiring an independent contractor is quite clear to an employer: the cost benefits. While the lifespan of employment is generally shorter, an employer can save significantly on costs such as health benefits, as opposed to a full-time position. But that raises the question: is that ethical? Or legal? There’s a very fine line by law when it comes to employee benefits and this concern is being brought up more than ever. In fact, it was brought up at a recent GOP debate when Carly Fiorina was asked about the growing number of workers who do not have a 401k or employer-sponsored retirement plan. Not surprisingly, she skirted around the subject. The matter of benefits for the on-demand workforce is a sleeping giant that seemingly no one wants to deal with. But the firestorm it can create is already apparent.

Many leaders of companies in the sharing economy are beginning to address this problem as they realize that this could snowball into longer term difficulties for the on-demand workforce and the employers who hire them if left unaddressed. A group of tech leaders, many from on-demand companies such as Handy, Instacart, and Care.com, have posted a letter on the website Medium calling for lawmakers to address the need of protection and benefits for this workforce. At the core of their campaign is bringing to light a freelancer’s plight – their work is nimble and unpredictable and they need a basic protections to cover them. This campaign and many others similar to it take aim at companies like AirBnb and Uber, two pioneers of the on-demand economy who have been widely criticized for their lack of employee support. While they are now launching campaigns to for legislation to provide independent contractors with support, they want to protect their own business model at the same time.

Change is still far away and slowly coming but the need to address this problem has been noticed. The on-demand workforce has become a very significant part of the American economy and the new way in which it works. In order for it to continue to not only sustain itself and grow, this workforce needs to be supported in one way or another.