Ride-Sharing in Corporate Travel Slowly Accelerates

Business travelers can literally tap into the power of the smart phone for yet another service: ride-sharing. If their employer has a policy around this new form of ground transportation, that is. Let’s take a look at ride-sharing and it’s potential for business use.

Getting Around Town, Together

Part of today’s emerging “share economy,” ride-sharing enables prospective passengers and freelance drivers to connect via a smart phone app. The passenger gets from point A to point B, and the driver makes some extra money. Drivers are contracted with a ride-sharing company, also called a Transportation Network Company (TPN), that facilitates the transaction.

The services of ride-share companies such as Uber and Lyft have become hugely popular among individual consumers, and it’s no wonder the TPNs have already begun extending their marketing reach to include the business passenger. Using Uber for Business instead of private livery services or taxis, the TPN claims on their website, companies can save up to $1,000 per employee per year. Uber’s business service offers streamlined administrative and billing capabilities and lets employers customize their solution to ensure policy compliance. Lyft for Work offers a similar value proposition

How Prevalent is Ride-Sharing in Corporate Travel Today?

The Global Business Travel Association (GBTA) Foundation’s 2015 Ground Transportation Study positions ride-sharing in fourth place (11%) behind the most commonly used forms of ground travel: rental cars (36%), taxis (24%), and chauffeured transportation (13%). The study also uncovered that one out of four (24%) companies don’t allow business travelers to use ride-sharing companies. Either they have not worked this new form of ground transportation into their T&E policies—or their policies prohibit their use.

The Employer’s Concern: Liability

The GBTA Foundation study revealed that when choosing ground transportation, business travelers consider traveler and vehicle safety ahead of availability for timely pick-up and convenience of payment methods. And with ride-sharing, liability is the major factor keeping many employers in neutral.

The main red flags are that ride-share drivers use personal vehicles, so they probably don’t have a livery driver’s license. And their vehicles are not registered or insured as commercial vehicles. Employers fear that they may be responsible to pay expenses related to an accident sustained by an employee riding in an uninsured or under insured ride-sharing vehicle.

According to Ride-Sharing and Insurance: Q&A on the Insurance Information Institute website, personal auto policies are not designed, underwritten or priced for commercial ride-sharing. In fact, a standard policy essentially prohibits for-hire services and will stop offering coverage from the moment a driver logs into a ride-share app to the moment their customer exits the car and the transaction is closed.

Insurance companies are working on solutions to fill this gap in the future—perhaps with riders or endorsements that can be added to drivers’ personal policies. And city and state governments are addressing the rising trend by creating regulations to keep businesses and individuals safe. For now, ride share companies themselves are covering their drivers with commercial policy coverage while their app is “on.”

Shifting Gears Toward Adoption

The TPNs are part of the educational campaign needed to speak to would-be business customers’ concerns. The Uber for Business website touts driver and vehicle safety and promises employers that all rides are covered by commercial auto insurance from pickup to drop-off. This will satisfy some employers, but not all.

Until they’re comfortable with the safety and liability safeguards, most companies will continue to take a wait and see approach. In the meantime, they’ll learn the new lay of the land (or way of the streets), and consider in due time whether or not ride-sharing is a viable alternative to ground transportation for their employees.