XL Catlin’s investment arm is helping to back an insurance startup designed to provide on-demand, pay-per-use insurance for rideshare drivers.

Slice Labs is the new startup, and it disclosed $3.9 million in seed funding on March 29. Horizons Ventures led the round along with XL Catlin’s XL Innovate. The company says its founders are technology veterans who have provided services for larger global insurers such as AIG, ACE, AXA, Progressive and Zurich/Farmers.

So what’s the elevator pitch? Slice said it has designed an on-demand insurance platform where buyers could obtain insurance with a tap, as needed. Slice will initially target Uber and Lyft drivers with a pay-per-use policy that covers drivers from the time they turn on their rideshare app until they turn it off.

Slice touts this as a unique option, being the only company to offer potential clients such as Uber and Lyft and others with the on-demand economy a pay-per-use coverage option.

There is certainly a market opening. A recent report from NerdWallet showed that out of 1,022 rideshare drivers nationally, 77 percent did not purchase additional rideshare coverage on top of what their rideshare company provides. Another survey by the Rideshare Guy found that 1 in 5 rideshare drivers have the required insurance, though interest in purchasing coverage appears to be on the rise.

In March, South Dakota became the 32nd state to approve a law that requires ridesharing drivers to carry insurance for all parts of the ridesharing experience.

As states have updated their legislation to address liability gaps for rideshare drivers, insurers have rolled out coverage that address different aspects of ridesharing. In January, for example, Farmers Insurance rolled out rideshare coverage in Oklahoma and Ohio that extends a driver’s auto insurance coverage until customers accept a ride, after which their transportation network company’s commercial insurance coverage would apply. In recent months GEICO, USAA, American Family and Allstate have also unveiled coverage or endorsements in states with updated legislation that either target coverage gaps for the driver or transportation network companies.

None appear to have on-demand online customer features, however.

Slice is based in New York City and is licensed to operate thus far in California, Connecticut, Iowa, Illinois, Pennsylvania, Texas and Washington.

Tom Hutton, managing partner at XL Innovate, said that his firm was drawn to the Slice founders’ insurance and technical knowledge, and push to address the on-demand market’s need for coverage in a different way.

“Slice is addressing this need with a unique solution that incorporates both software technology and insurance,” Hutton said in prepared remark.

Frances Kang of Horizons Ventures said she a market opening for new products for the on-demand economy, and believes Slice can grab the opportunity.

“Its algorithmic approach and data-driven pricing model are truly innovative in the insurtech world,” Kan said in prepared remarks. “We are excited to see Slice bringing more peace-of-mind and continuing improvement of the customer experience for the on-demand economy.”