If Your Member Crashes While Driving for Uber, Is Your Loan Covered?
October 19, 2015
October 19, 2015
CUNA Mutual Group is enhancing its Collateral Protection solutions for credit unions to address emerging risks to their loan portfolios related to the growing popularity of Transportation Network Companies (TNCs) like Uber and Lyft.
A new no-cost TNC endorsement to CUNA Mutual Group’s Collateral Protection Blanket Auto policy protects credit unions from potential loan losses due to damage caused while a borrower is operating as a TNC driver. The new coverage became effective Oct. 1, in most states. State National Companies, CUNA Mutual Group’s alliance partner for Tracked Collateral Protection Insurance, will also be adding a similar, no-cost endorsement for Tracked CPI customers.
Ride sourcing organizations such as Lyft and Uber enable individuals to use their personal, non-commercial vehicle as a livery, or taxi-type service through a mobile app managed by the TNC that connects passengers with drivers. Drivers are attracted by the opportunity to be their own boss, work a flexible schedule, and earn extra income.
However, most personal auto policies don’t include coverage for commercial use, and state legislation doesn’t require TNCs to provide comprehensive/collision coverage, said Al Olson, CUNA Mutual Group staff underwriting specialist. As a result, many drivers aren’t aware they may not be adequately covered when driving for a TNC.
“TNC drivers might think their personal insurance will cover them if they are in an accident while ‘on the job,’ but that may not be the case,” Olson said. “If physical damage occurs and there is no insurance coverage, the likelihood of drivers defaulting on their auto loans increases, which creates a potential loss exposure for lenders.”
Although a credit union may have collateral insurance in force to protect their loan portfolio, standard collateral insurance coverage excludes vehicles while used for “public or livery conveyance,” Olson added. “So there would be no coverage for the credit union in this situation. That’s why we created the TNC endorsement to cover credit unions should this occur.”
To learn more, attend CUNA Mutual Group’s Discovery Conference on Oct. 21, to participate in a live chat about “Uber, Lyft and Your Rising Loan Risk” at 10:10 a.m. CDT, in the “Protect Your Loan Portfolio” booth located in the conference’s Solutions Center. Registration for the event is free.
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