What Is Rideshare Insurance & Do You Need Special Insurance For Uber & Lyft?
We’ve saved shoppers an average of $600 per year on their car insurance.
You’ve found a fantastic way to earn a supplemental income providing rideshares, but what does this mean for your personal auto insurance policy? Whether it’s your main source of income or just a side-hustle, if you’re making money through a ridesharing platform, you need to look into insurance coverage. As an Uber, Lyft, or other Transportation Network Company (TNC) driver, you become vulnerable to new liabilities.
Before you start working, find out what your policy needs to cover, and how to get adequate car insurance protection for your work at a ridesharing company.
A personal auto insurance policy alone won’t provide enough protection. Without rideshare-specific coverage, you could be liable for significant damages if you cause someone injury.
This article will go over the basic steps you need to take to find the insurance you need to keep earning money without risking financial catastrophe.
What Insurance Do Rideshare Companies Provide?
Rideshare Companies typically provide insurance coverage according to four different driving stages.
| Rideshare Stage | Insurance Provided by Rideshare Service |
| Offline | None. Only your personal car insurance policy protects you. |
| Online/Available | Third-party liability coverage ($25,000 property damage, $50,000 for bodily injury per person, and $100,000 total for bodily injury) |
| En Route for Pickup | Third-party liability coverage for $1 million. Comprehensive and collision coverage with a deductible between $1,000 and $2,500. Uninsured and underinsured motorist bodily injury coverage for $1 million. |
| Driving with Rider | Third-party liability coverage for $1 million. Comprehensive and collision coverage with a deductible between $1,000 and $2,500. Uninsured and underinsured motorist bodily injury coverage for $1 million. |
As you can see, the coverage gaps left by the policy leave you open to potential liabilities. What happens if you’re involved in an accident while you’re offline? Is there a way to cover the high deductible if you’re in a collision?
Different types of rideshare insurance solutions can cover these gaps.
What Your Insurance Should Cover
As a driver for a ridesharing service, you’re required to obtain insurance that meets your state’s minimum requirements. For end-to-end protection, you’ll need a policy that includes the following.
- Comprehensive and Collision as well as Uninsured or Underinsured motorist (UM/UIM) coverage protect you during the online/available stage.
- Deductible Reimbursement covers the difference between the deductible of your insurance policy and that of the rideshare company’s.
- Additional coverage, such as roadside assistance, rental car reimbursement, and medical payment is recommended.
The type of insurance available, the scope of coverage, and the cost of premiums vary widely by state and insurance companies. You may also wish to increase the limits of your liability coverage.
Read: How Your Auto Insurance Rates are Determined
Types of Rideshare Policies
Insurance providers offer policies designed specifically for the needs of rideshare service drivers. This coverage can protect you during critical moments that the commercial plan doesn’t.
For example, when you are available, or online, you only have liability coverage from the rideshare platform. However, if you’re involved in a severe accident during this time, you won’t be covered.
A personal rideshare insurance policy, or endorsement on your current auto coverage, can help you avoid these potential risks. Below are some examples of rideshare policies that can pick up the slack.
Extension for Personal Auto Insurance
Your insurer may offer you an extension on your personal car insurance policy to cover certain stages of your ridesharing trip.
Gap Coverage
Many rideshare drivers obtain additional coverage from auto insurers in the form of rideshare insurance. Your insurer can suggest a specific plan to fill the gaps in the commercial rideshare policy.
Hybrid Insurance
A hybrid insurance plan will replace your current coverage with a policy that offers both rideshare and personal protection.
What if Your Personal Insurer Doesn’t Sell Rideshare Insurance?
You might feel like you’re in a bit of a jam if your insurer doesn’t sell rideshare insurance and the policies offered though the rideshare company don’t cover everything you need it to. But don’t panic. You should still be able to find options.
Do a bit of research or talk to your agent about the auto insurance companies that provide rideshare insurance in your state. You will probably have to quit doing business with your current auto insurer and switch to a new company. That might seem like a big step, but it’s better than working without protection.
Why You Need to Tell Your Insurance Company That You Drive for a Rideshare
Typically, your personal auto insurance policy doesn’t offer coverage when you drive for a TNC or other commercial purposes. As a result, you could be financially vulnerable in the event of an accident from the moment you log in on the ridesharing app, to the moment you finish your workday.
If you want to drive for a rideshare company, tell your insurer, who can provide additional protection for commercial purposes, either through an endorsement or supplemental policy. This way, you’ll be fully covered throughout every stage of the rideshare.
What Happens if I Don’t Have Rideshare Coverage?
If you drive for a TNC without rideshare coverage, you’ face the following risks:
- Your insurer could cancel your policy.
- Coverage gaps could result in costly out-of-pocket expenses.
- You could be liable for medical costs or property damage in the event of an accident, even if you aren’t at fault.
You can quickly and affordably avoid these risks by informing your insurer that you work for a ridesharing service. There are many different options for coverage that can offer you full protection and minimize your liability.
Read: 7 Ways Uber and Lyft Drivers Can Protect Their Investment
Final Thoughts
Working for a rideshare service provider doesn’t come without its risks. However, your insurance company can help you design a rideshare plan that fills the coverage gaps left by TNCs.
