Pros and Cons of Private Car Services

Ride-sharing services pair smart-phone users in need of rides with drivers willing to provide them. Services such as UberX, Lyft and Sidecar say they’ll get you from point A to point B more cheaply than a cab, as long as you forget what your mother told you and get in a car with a stranger.

Here’s how they work: Download the app and enter your credit card information. Every time you sign in, you’re brought to a map showing your location along with the location of available drivers. Click a button to request a ride and up pops the name and picture of a driver, along with a user rating and the make and model of his or her car. After you arrive at your destination, you pay and rate the driver through the app.

Rides are usually cheaper than taking a cab. Sidecar says its rides cost 20% to 40% less than a cab in most cities. But during times of high demand, such as a snowstorm or on New Year’s Eve, all three serv­ices bump rates higher, sometimes by 200% or 300%—in order, they say, to ensure there are enough drivers on the road.

From just $107.88 $24.99 for Kiplinger Personal Finance

Be a smarter, better informed investor.

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

For now, these services are offering cheap rides in 27 cities, including Chicago, Los Angeles and New York. California is the first state to regulate the services, insisting on background checks and company-provided liability insurance, whether or not drivers are covered by their own policies. Other state and local governments are wrestling with these issues. The companies insist they vet drivers thoroughly and have adequate insurance. But questions remain about what a driver’s personal policy covers—insurers say coverage is nullified when drivers use vehicles commercially—and for what (and under what circumstances) the companies are liable if there’s an accident.