What makes this even more concerning is that the driver's insurance company may decide he is carrying passengers for hire and, therefore, that the regular car insurance offers limited or no coverage.

My policy says it does not apply:

"To any vehicle used to carry persons or property for compensation or a fee, including but not limited to delivery of food or any other products...However, a vehicle used in an ordinary carpool on a ride sharing or cost sharing basis is covered."

The question would be whether this is an "ordinary carpool on a cost sharing basis." Lawyers are paid to argue about these things.