Insurance

2019 Rideshare Insurance Guide

Rideshare Driver? Here's How to Maximize Your Protection

For many becoming a rideshare driver is an excellent way to make money. From freelancers to stay at home moms, everyone is becoming an Uber or Lyft driver to fill in the income gaps. And why not? The ability to work when your schedule allows is one of the major draws of the gig. 

One thing many drivers overlook, however, is auto insurance. Sure, you may have your own auto policy, but as a rideshare driver chances are your personal policy provides no coverage when passengers are your vehicle. Most personal auto policies have an exclusion for using your car for “livery” — carrying passengers or goods for a fare. 

And while Uber and Lyft have their own policies to cover drivers, there are times when this coverage is minimal. Let’s look at how each respective policy works. 

Uber vs. Lyft, an Insurance Showdown

Both Uber and Lyft provide coverage for their drivers. The tricky part is understanding when their coverage kicks in and when personal auto policy kicks in. But keep in mind if you haven’t disclosed to your personal auto insurance carriers you drive your car for profit, there is a possibility they will cancel you and may even deny any claims.

Let’s say you are in your vehicle, but the app is off, and you accidentally rear end the car in front of you. In this scenario, your auto insurance would cover the loss. In a second scenario, your app is on also known as Period or Phase 1, and you are waiting for a request. Unfortunately, while you are driving around waiting for a passenger, you hit another vehicle. Both Uber and Lyft provide third-party liability coverage for this. While exact limits may vary based on state requirements, both companies offer the following:

● $50,000 per person/$100,000 per accident for bodily injury

● $25,000 per accident for property damage

The problem with this coverage is that it is minimal and if you exceed the limits, you are responsible for any remaining amount. It also does not provide coverage for your vehicle. And since you were in “driver mode” your personal auto policy would not provide coverage either.

Now, the moment you have been waiting for. You accept a ride request and en route to pick up a rider. During this time and while you’re on the trip, known as Period or Phase 2 and 3, both Uber and Lyft’s primary coverages kick in if you were in an accident. They may vary slightly, but coverage boils down to three things:

  1. Third party liability provides coverage to any third party such as a pedestrian, another driver, or property in case of an accident when you’re at fault. Coverage may limits vary by state, but both companies provide at least $1,000,000 per accident.

  2. Contingent comprehensive (think fire or natural disaster or even hitting an animal) and collision (you hit an object or other car) provides coverage for your vehicle up to the actual cash value if you are in an accident whether it was your fault or not as long as you have a personal auto policy in place that includes collision and comprehensive coverage for your car during times you are not on a trip. Uber has a $1000 deductible, and Lyft is $2500. Deductibles are the amount you pay before the insurance company kicks in.

  3. Underinsured or uninsured motorist bodily injury provides coverage for you plus anyone else in your car in a situation that an accident occurs where another driver is at fault but does not have sufficient limits on their insurance. This also covers hit-and-run accidents where the at-fault driver cannot be found or identified. Coverage limits may vary by state, for Lyft drivers and Uber provides at least $1,000,000 per accident.

When are you covered?

Phase 1
You're online, but not on a trip and no trip has been accepted yet.

Coverage Details Uber Insurance Lyft Insurance
Liability Only
$50,000 bodily injury per person.

$100,000 bodily injury per accident.

$25,000 property damage per accident.
$50,000 bodily injury per person.

$100,000 bodily injury per accident.

$25,000 property damage per accident.
Phases 2 & 3
Phase 2 (trip accepted and en route to passenger)
Phase 3 (trip has started, passenger is in the car)
Coverage Details Uber Insurance Lyft Insurance
Liability
$1 million per incident.
$1 million per incident.
Uninsured/underinsured motorist
$1 million per incident.
Coverage varies by state.
Comprehensive and collision
Up to value of your car if you also have comprehensive and collision coverages on your personal policy.
Up to value of your car if you also have comprehensive and collision coverages on your personal policy.
Comprehensive and collision Deductible
$1,000
$2,500

So, you may be wondering where’s the rub? Even if my personal auto policy doesn’t provide coverage, the rideshare companies do. Well, the problem is during the time your app is on before you accept a ride and have a passenger in your car. Think about how often you actually have a passenger vs. the time you are waiting for one. If you were to get into an accident during that time frame, you run the risk of losing your livelihood.

Why You Need Rideshare Insurance

As the popularity of driving for rideshare companies increases, insurance carriers have gotten wiser. Many have recognized the need for a product that picks up where both personal auto policies and rideshare policies leave off. 

These types of products are typically designated into three categories:

Additional Protection added to your auto policy and provides coverage while you have the app on. Picking up what may not be covered through Uber or Lyft’s policy. 

Personal Coverage Extension extends personal coverage into certain stages of the ridesharing trip. Basically, carriers that offer this are extending their business use clause that once only covered food delivery to include rideshare services. 

Hybrid Insurance Packages are explicitly designed to replace your personal auto insurance with a rideshare friendly policy. 

When shopping for rideshare, insurance keep the following in mind:
  • Be sure to tell your personal auto carrier you drive for a rideshare company.
  • Make sure you understand the coverage gaps between your policy and the company’s policy. While Uber and Lyft provide up to $1million in coverage while en route, smaller rideshare companies may not.
  • Check with your current auto carrier if they offer rideshare insurance to fill in the holes in coverage or ask if they can quote you a commercial auto policy.
The Bottom Line
There are gaps in rideshare policies.
The biggest one is while you are waiting for a passenger.
You need a rideshare policy to fill in the gaps.
You need to be aware of what is covered by your personal policy and the rideshare company policy to be properly protected.
Risking your livelihood and personal insurance coverage is not worth it.
Personal auto carriers can drop you and you would have to pay for repairs yourself.

The hitch with rideshare insurance is that it may not be offered in your state, yet. If you can’t find a rideshare policy in your area, your best form of protection is to secure a commercial auto insurance policy. A commercial insurance policy typically costs more than a personal auto policy with a rideshare add-on or hybrid policy, but it’s essential to protect yourself. If you were an accident while waiting for a request, imagine the costs associated with repairing your vehicle or worst-case scenario replacing your vehicle.

The Takeaway

As a rideshare driver, your vehicle is your bread and butter. If you are involved in an auto accident without enough coverage for the accident, not only could you be without a vehicle you could find yourself facing a lawsuit to cover the damages the other party sustained. Protecting yourself with rideshare insurance or a commercial policy if rideshare insurance is not available in your area is the best way to do this. The cost of maintaining the right insurance is minimal when compared to the costs you may face if you are in an accident without the right coverage. Plus, you don’t want to be the one paying for a ride. 

This article is for informational purposes only and RideshareGuru.com does not make any guarantees to its accuracy as each state’s insurance situation is unique. We recommend that you contact your insurance agent for the most accurate information regarding your coverage.

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