Carpooling and Liability Insurance

Carpooling and Liability InsuranceCarpooling is a lifesaver for most parents, but did you know it could open you up to an insurance risk?

Here's the deal: most of the time the liability part of your car insurance covers you if you're in an accident while transporting other people's children to and from school or soccer practice or ballet class or…whatever.  That can change, however, if you receive any compensation for your time and the use of your car - even if it's a token form of compensation, like gas money.

The reason compensation is an issue is because when you accept money for driving you're technically using your vehicle for business use, and this isn't always covered by the minimum liability coverage your state requires you to have. You might have to add a business use rider to your policy to be adequately covered, or look into carpooling policies - they do exist.

If your insurance already covers carpooling, you may want to consider boosting the coverage amounts. Standard policies only cover up to about $2,500 per person for medical payments, and you should probably have something more like $5,000/person. Don't stress too much though - that sort of change shouldn't cost more than $20-$50/year.

If you actually operate a home-based business such as day care, voice or dance lessons, or act as a team coach - anything where carpooling or offering rides home is a standard practice, you'll want to discuss that with your insurer, as well, because chances are that your existing auto liability coverage is not enough.

When you're the driver of a carpool vehicle, you are responsible for the passengers in your care, even if those passengers are other adults, so make sure that you have enough seatbelts for everyone in the car, and require that your passengers use them…you can consider that a bit of extra insurance you get for free.

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