Rideshare Insurance: How to Ride The Wave
TLTR: Rideshare insurance can be a valuable financial backup to have if you frequently utilize ridesharing apps such as Uber or Lyft. This article elaborates how it protects you when your standard auto insurance doesn’t.
Thinking about taking up a side hustle to earn some extra cash? Know that your personal auto insurance, or personal auto policy (PAP), does not cover your vehicle if you’re using it to earn money. Whether it is for carrying passengers or goods, drivers will need rideshare insurance for on-demand delivery services.
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What is Rideshare Insurance?
Rideshare insurance is a specialty insurance product designed for drivers of rideshare companies like Uber, Lyft, or any other Transportation Network Companies (TNCs). Your PAP doesn’t cover your auto if it’s used for commercial purposes. What’s more, a commercial policy is expensive. Therefore, it bridges the gap so that you can extend coverage to your existing PAP while using your insured vehicle for ridesharing.
Who is Rideshare Insurance for?
Rideshare insurance is for you if you:
- work as a rideshare driver for companies like Uber or Lyft
- are working for other TNCs
- you work as a delivery service person for companies like Amazon, Grubhub, Instacart, etc.
- have minimal or no taxi insurance coverage
Why do you Need Rideshare Insurance?
Even though many rideshare companies provide some form of an insurance policy for their rideshare drivers, it’s not enough. Simply put, if you are a rideshare driver and have both a PAP and an employer-provided insurance policy, there remains a coverage gap. Your PAP does not cover you while transporting customers. Also, the employer-provided policy provides limited coverage.
For instance, Uber’s and Lyft’s insurance protects you only after you receive a rideshare request, but does not cover for damages or liabilities due to accidents happening while you are waiting for rideshare request. In that case, you will be the bearer of exorbitant expenses.
Although there is no legal provision requiring you to buy insurance for rideshare, you need to understand its significance for your financial health. As a rideshare driver, you will constantly be behind the wheel, which means greater exposure to accident-related expenses.
So, rather than opting for standard coverage, go for an additional insurance policy for rideshare from a private insurer. It is only wise that you purchase more extensive coverage than the average commuter.
Lyft and Uber Insurance Coverage Structure
- Lyft’s and Uber’s insurance policies for their rideshare drivers offer minimal coverage. Typically, Lyft and Uber categorize the rideshare period in the following phases:
- Offline: When the app is off, your PAP covers for damages caused by covered perils.
- Period 1 – Online: Your PAP doesn’t cover you after you turn your app on and are on the clock. Also, as long as you do not get a customer’s ride request, your employer-provided policy is inactive. So, there is a coverage gap in this period.
- Period 2 – Customer Pick-up: Your Lyft or Uber insurance becomes active immediately after you accept ride requests and are on the way to pick up your customers. Remember that your employer-provided policy provides limited coverage up to the liability limits. For example, both Lyft’s and Uber’s insurance policies cover $25,000 for property damage, $50,000 per person, and $100,000 per incident. Any costs exceeding these limits are yours to bear.
- Period 3 – On Trip: Your employer-provided insurance covers you while you transport your customers. For example, Uber covers losses up to $1 million for every accident that occurs between accepting a rider’s request to dropping off the customers. Immediately after you drop your customer, you will automatically return to the online phase, i.e., period 1. Remember that neither your PAP nor your employer-provided policy covers you during period 1.
What Does Rideshare Insurance Cover?
- Your rideshare insurance covers the following:
- Collision Coverage: Your insurer compensates you for damages to your vehicle due to a collision. It applies when you hit or are hit by another vehicle. To get collision coverage, you need to have collision coverage in your PAP.
- Comprehensive Coverage: Your insurer compensates you for damages to your vehicle due to any incident other than a collision–for instance, damage and loss due to fire, flood, theft, etc. Don’t forget, if you want your insurance to provide this coverage, you should be insured for comprehensive coverage under your PAP.
- Medical Payments: The insurer provides compensation for any medical fees incurred during the treatment of passengers who were injured while in your vehicle. This compensation extends to when you get injured as a pedestrian.
- Uninsured Motorist Coverage: Not everyone has sufficient insurance coverage. In fact, some people do not even have car insurance, to begin with. If such a motorist injures you or your passengers, the insurer bears all the necessary medical expenses.
Besides these coverages, you may want to explore other coverages such as rental reimbursement coverage, emergency road service coverage, etc.
Talk to your local insurance agent or let us know in the comments below for any coverage related questions. If you’d like to talk to a local agent, check out our agent directory to match with the best insurance agent near you.
How can I get rideshare insurance?
You can get rideshare insurance in various ways and it depends on the provider. For instance, if you want a rideshare policy from Farmers, you need to make a call and connect with an insurance agent. In contrast, some auto insurance providers offer you an extension to your PAP or add a new TNC policy via their online portal or website.
Do I need rideshare insurance if I am driving for a delivery service?
From an insurance point of view, ridesharing and delivery services are similar. Coverage of your personal auto insurance is limited to certain times. While your PAP might cover you during your drive to a restaurant or food station to pick up orders, it doesn’t cover you while you sign in on the app, waiting to accept orders. Meaning, you need rideshare insurance if you are providing delivery services.
How can I get coverage if rideshare insurance is unavailable in my state?
Unfortunately, rideshare insurance is not currently available in every state. If you happen to be from a state without it, you will need to purchase a commercial insurance policy. Comparatively, a commercial insurance policy has higher liability limits and, thus is more expensive than a PAP. However, it will cover you and your vehicle while you’re working as a driver.
Do I need to tell my insurer that I am using my vehicle for ridesharing?
Yes, you must tell your insurer or insurance agent regarding the use of your vehicle. If your PAP provider finds out that you used your insured car for commercial purposes, the insurance contract will be void and you may even be refused to be insured. The bottom line is to be honest and respect the principal of utmost good faith with your insurance providers.
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