- MoneySuperMarket warns that informal ridesharing could accidentally breach your car insurance policy terms
As summer gets underway and Brits hit the road for festivals, barbecues, beach trips and family gatherings, MoneySuperMarket car insurance experts are urging drivers to think twice before asking friends for petrol money, especially if they’re charging more than the journey actually costs.
Offering lifts to mates for these kinds of events might seem harmless but overcharging could be interpreted by insurers as a profit-making activity. That blurring of lines between cost sharing and commercial gain could potentially invalidate your car insurance, leaving you uninsured without you realising it.
Alicia Hempsted, car insurance expert at MoneySuperMarket, explains:
“It might seem harmless to ask a mate for £10 when the fuel only cost you £5, but insurers may view that as profit. That small mark-up could shift you into the ‘hire and reward’ category, which entails transporting people for money, which isn’t covered by most personal car insurance policies.
“If you’re in an accident under these conditions, your insurer could reject your claim or even cancel your policy entirely. That’s not just costly – it could lead to fines or prosecution for driving without insurance.”
“There’s a clear line between sharing costs and making a profit,” she says. “HMRC and the Association of British Insurers both acknowledge that genuine cost-sharing is allowed. But the moment you start earning, even a small amount, it could be viewed as commercial activity.”
She explains that several behaviours could raise red flags with insurers. Regularly offering lifts to people outside your household in exchange for money, charging more than the actual cost of fuel and vehicle wear, or advertising your availability for lifts on social media or online forums could all be interpreted as providing a paid-for service.
And the consequences can be severe. If you’re involved in an accident under these conditions, insurers could void your policy from the beginning, meaning it’s treated as if it never existed. They may also refuse to pay out for any damages or injuries, and in some cases, report you for driving without valid insurance.
“This isn’t just about a rejected claim,” she warns. “You could be left with huge out-of-pocket costs, points on your licence, or even a prosecution for uninsured driving.”
So how can drivers stay on the right side of the rules? According to Hempsted, it’s about keeping things simple and transparent.
“Only ever ask passengers to cover what the trip actually costs you in fuel and vehicle running costs, a fair way to work this out is by using the HMRC mileage rate 1 (currently 45p per mile), which covers both fuel and everyday wear and tear like servicing, insurance, and tyres,” she advises. “Avoid making any kind of profit – that’s what can turn a friendly lift into a commercial transaction in the eyes of insurers. You can use our fuel cost calculator tool to check the cost of petrol used.”
She also recommends carefully reviewing your car insurance policy. Some insurers might offer specific allowances for lift sharing, but the details can vary widely.
“And if you’re thinking about using your car for more regular income, for example driving for uber or doing delivery work, you need the proper business use or ‘hire and reward’ cover. It’s worth comparing quotes to get the right protection for how you use your vehicle.”