What Drivers Need to Know about Rideshare Insurance

Editor’s Note: This article was created in collaboration with The Simple Dollar

If you are interested in working for a rideshare service (or are working for one currently), you know that it’s a great way to make some extra money. But there’s a hidden factor that the rideshare companies don’t always discuss: insurance.

Typical auto insurance policies may not cover rideshare activity, and insurance provided by rideshare companies may not cover you in all situations. The good news is that there are now many insurers who provide rideshare add-ons to auto policies that will guarantee you’re covered.

Usually the fee to add rideshare insurance to your regular car insurance is nominal (under $20 per month) and is highly recommended for anyone who wants to give rideshare a try.

Article Contents

• Why Do Drivers Need Rideshare Insurance?
• What Does Uber/Lyft Insurance Cover?
• How Much Does Rideshare Insurance Cost?
• How to Get Rideshare Insurance

Why Do Drivers Need Rideshare Insurance?

Consumer auto policies don’t cover commercial activity, so you run the risk of an accident claim being denied by your personal insurer if they find out that you were driving for a rideshare service. You may still be covered by Uber or Lyft, but you will have to find a new personal policy.

The largest potential gap in insurance coverage is when you have the app on, but you are not matched with a rider. Uber and Lyft only offer minimal liability coverage during this period, and no collision coverage. And without rideshare insurance, your insurer might not cover collision damage, leaving you on the hook for all costs.

That’s where rideshare insurance comes in: Rideshare-friendly insurance policies won’t drop you for driving for rideshare services, and will cover you during that crucial first period where you’re waiting for passengers. Rideshare insurance also offers the peace of mind that you’ll never have to hide your rideshare work from insurers.

What Do Uber/Lyft Insurance Policies Cover?

You may have seen that Uber and Lyft provide full coverage when you are driving with a passenger in the car, but their insurance does not cover everything.

To describe how coverage works, the rideshare driving experience is broken down into three periods by insurers: Period 1, 2, and 3.

(There is also Period 0, which is when the rideshare app is off and you aren’t actively looking for rides. In that situation, your personal insurance covers you. But that one is more obvious than the others)

Period 1: Limited Coverage When You Are Waiting For a Ride

When you are logged in and waiting to receive a ride request (Period 1), the rideshare companies do not cover you entirely. At this time, Uber and Lyft offer some limited liability during this period — currently up to $50K for personal injury (per person), up to $100K personal injury (per accident) and $25K property damage (per accident).

In addition, your regular auto insurance also does not fully cover you at this point if you don’t have a rideshare insurance add-on. It is a bit of a limbo area where you likely want to have rideshare insurance.

Period 2 & 3: Uber and Lyft Cover You in These Situations

You are fully covered by the rideshare service once you are matched with a rider and on the way to pick them up (Period 2), and all through the time you have dropped the rider at their destination (Period 3). Uber and Lyft offer a liability policy of $1 million per incident, as well as comprehensive and collision if you also maintain collision coverage on your own insurance.

The collision deductible for Lyft is $2,500, and $1000 for Uber drivers. Basically, they have you covered from the moment someone contacts you but not before or after that.

How Much Does Rideshare Insurance Cost?

The cost for rideshare insurance add-ons ranges between $6 per month for USAA and Mercury, to about $20 per month for Allstate. The policies aren’t offered in every state for every company, so make sure to check out which states are eligible under yours. Geico insurance provides a ridesharing insurance that is a type of full coverage, so that you don’t have to worry about paying a supplementary fee.

If your insurance does not provide rideshare insurance in your state, you might want to look into a policy that does. Or you can look into commercial auto insurance. The average commercial  policy is about $1800 per year, according to TrustedChoice.

Depending on your state, payments you make toward this insurance may be taken off your income taxes, and it may include perks like roadside assistance, bundles that include discounted insurance rates for other policies you are seeking, as well as discounts for safe drivers.

How to Get Rideshare Insurance

To get rideshare insurance, your first step is to contacting insurers or searching their websiteses to see if they offer rideshare add-ons or rideshare friendly policies in your state. Contacting a local insurance agent may help speed up the process if you’d rather skip the online research.

Once you find a rideshare policy that you’d like to sign up for, you’ll need a few pieces of information to fill out the application. Make sure you have:

• A current valid driver’s license
• The registration for your vehicle
• The title of the vehicle
• Current personal auto insurance policy number
• Information on the make, model and year of your vehicle

They may also ask you about rideshare experience if you have any – what companies you work for, your average number of monthly rides, and they average mileage per trip.