A recent study published by JP Morgan Chase found that around 10.3 million Americans earned income through the major web based platforms over a three-year period. These web based platforms include Airbnb, VRBO, Uber, Lyft, and more. These platforms allow people to provide rides or rent out their homes for money. Males, between the ages of 18 and 24, living in the western US are largely responsible for the growth of this economy.

These participants are making an average monthly income just under $3,000. This study shows that many Americans are looking for a way to make extra money on their own time. These web based platforms provide the opportunity to do just that. Airbnb and rideshare companies, like Uber and Lyft are helping Americans earn more, however there have been numerous insurance growing pains related to these services.

Airbnb

Airbnb provides a platform enabling hosts to rent out all or part of their homes to people looking for alternatives to hotels. Airbnb has over two million listings and has grown rapidly since its debut in 2008. Airbnb takes between six to 12 percent of hosts’ earnings.  

Standard homeowners and renters insurance policies don't cover commercial activity in the home. Homeowners should consider this before listing a property on Airbnb. Insuring your home while renting it on Airbnb used to be trickier and more expensive. You had to pay higher home insurance premiums because you needed hospitality coverage to protect you if a guest damaged your home. In January of 2015, Airbnb started a program that helps with insurance coverage called Host Protection. The Host Protection plan covers all Airbnb properties for up to $1 million per incident. It covers hosts in the event that someone gets hurt in, or damages, their property. If you want to learn more about homeowners insurance and Airbnb, read our article here.

Rideshare: Uber and Lyft

Other examples of web based platforms that many people are using to earn extra money are ridesharing services Uber and Lyft. Uber, founded in 2009, and Lyft, founded just a year later, have continued their rapid driver and user growth.

Average hourly driver pay is well above any state’s minimum wage. A five-hour shift can make you more than $100 per day in some cities. It's understandable why many people are jumping at the chance to earn extra money as an Uber or Lyft driver. However, there are many things an individual should take into account before signing up to be a driver.

Uber and Lyft represent a significant opportunity for drivers. But there are also some issues related to the murky insurance situation in the rideshare industry. Like Airbnb, Uber and Lyft have innovated faster than insurers can keep up with. They are only just now catching up. To become an Uber or Lyft driver you must have proof of insurance. But driving your car around as an Uber or Lyft makes your vehicle a commercial vehicle. Commercial use of a vehicle is not covered under standard car insurance policies. Most car insurance companies won't cover you if an accident occurs while you are performing duties as a rideshare driver.

Fortunately, both rideshare companies have created insurance coverage to fill in the gaps in their drivers’ regular car insurance policies. This auto insurance covers drivers from the time they turn on the app and start accepting rides, until they drop a passenger off. The rest of the time their regular car insurance policy is in force. Yes, unfortunately this does mean that drivers still need to pay for their own personal car insurance policy. Some states offer a rideshare-specific insurance option. Read our rideshare insurance article to see what your state offers. If your state doesn’t offer rideshare insurance options, consider a commercial auto insurance policy.

JP Morgan Chase's study found that Americans are looking for alternate options for employment and these platforms have catered to those needs. They offer a way for an individual to supplement their income on their own time. As flexible jobs and the sharing economy grow ever more popular, regulators and insurance companies will continue to need to change in order to ensure that employees and customers are protected.