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Rideshare Insurance: 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 companies cover drivers, but the tricky part is knowing when their coverage applies and when your personal policy does. If you have not told your personal insurer that you drive for a rideshare company, it may deny claims or cancel your policy.
Say you are driving with the app off and you rear-end the car in front of you: your personal auto insurance covers it. Now say the app is on and you are waiting for a request, known as Phase 1, and you hit another vehicle while cruising for a passenger. In that case Uber and Lyft provide third-party liability coverage. Exact limits vary by state, but in most states they are:
- $50,000 per person / $100,000 per accident for bodily injury
- $25,000 per accident for property damage
This coverage is minimal. If you exceed the limits, you are responsible for the rest. It also does not cover your own vehicle, and because you were in “driver mode,” your personal policy may not either.
Once you accept a request and head to the pickup (Phase 2), and during the trip (Phase 3), the companies’ primary coverage applies. It comes down to three things:
- Third-party liability covers other drivers, pedestrians and property when you are at fault. Both companies provide up to $1,000,000 per accident.
- Contingent comprehensive and collision covers damage to your own car (think fire, hitting an animal, or colliding with an object or another car), up to the car’s actual cash value, whether or not the accident was your fault, as long as your personal policy includes comprehensive and collision coverage for times you are not on a trip. Both Uber and Lyft currently list a $2,500 deductible, although Uber’s lower-priced Vehicle Marketplace vehicles carry a $1,000 deductible. A deductible is the amount you pay before the insurer pays the rest. Confirm the current amount in your driver app.
- Uninsured / underinsured motorist coverage protects you and your passengers if another driver at fault has too little insurance, or leaves the scene (a hit-and-run where the at-fault driver cannot be identified). Limits vary by state; both companies provide up to $1,000,000 per accident in many states.
When are you covered?
Phase 1
You’re online, but not on a trip and no trip has been accepted yet.
| Coverage Details | Uber | Lyft |
|---|---|---|
|
Liability Only |
$50,000 bodily injury per person. |
$50,000 bodily injury per person. |
|
$100,000 bodily injury per accident. |
$100,000 bodily injury per accident. |
|
|
$25,000 property damage per accident. |
$25,000 property damage per accident. |
Phase 2 & 3
Phase 2 (trip accepted and en route to passenger)
Phase 3 (trip has started, passenger is in the car)
| Coverage Details | Uber | Lyft |
|---|---|---|
|
Liability |
$1 million per incident. |
$1 million per incident. |
|
Uninsured & Underinsured Motorist |
$1 million per incident. |
Coverage varies by state. |
|
Comprehensive & 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 & 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.
Sarah Ware (CISR) holds licenses in Property and Casualty as well as Life and Health insurance and has worked in the insurance industry for over 10 years.
