Small business tips

Do I Need Rideshare Insurance If I Drive for Uber or Lyft?

Road accidents happen even to diligent drivers. But if you drive for a ride-sharing company, don’t assume that the damages for those accidents will be on the company’s dime. Rideshare insurance can protect you and your passengers even when your personal car insurance and the ride-sharing company’s insurance don’t. Read on to figure out whether the formal protection is for you and how options like Farmers rideshare insurance can give you peace of mind when you hit the road.

What is rideshare insurance?

Rideshare insurance is a type of car insurance coverage available to people who drive for a ride-sharing company such as Uber or Lyft. The insurance is designed to fill the gap in coverage provided by your personal car insurance and the commercial insurance offered by the ride-sharing company. For this reason, Farmers rideshare insurance and similar options are sold as an add-on to your existing car insurance policy.

The insurance is usually not mandated by ride-sharing companies. Rather, ride-sharing drivers can elect this type of coverage to protect them in the event of accidents that incur vehicle or property damage or medical expenses related to injuries to yourself or a third-party. Going without rideshare insurance can expose you to considerable financial losses because of the sheer volume of time you spend in a car and on the road as a driver.

Don’t Lyft and Uber already offer drivers insurance?

Yes, but the commercial insurance that Lyft and Uber offer their drivers is not end-to-end coverage. That is to say, the coverage doesn’t extend from the time you start your car to the time the ride has ended in the ride-sharing app.

Ride-sharing companies usually divide drives into three periods, providing varying levels of coverage (or none at all) during each period.

Offline: This period includes all the personal drives you take when you’re not driving for the ride-sharing platform and driver mode is off in the mobile app. You’re usually only covered by your personal car insurance policy for incidents that occur during this period.

Waiting for request: This stretch of time extends from the time you turn on driving mode in the app to the time you accept a ride request. Most ride-sharing companies only provide limited liability insurance coverage during this waiting period. For example, Uber and Lyft both have the following maximum coverage limits:

  • $50,000 per person
  • $100,000 per incident
  • $25,000 for property damage

The coverage usually only covers your liability to a third party for bodily injury or property damage. Farmers rideshare insurance or similar equivalents take effect during this stage by bridging the limited coverage offered by the ride-sharing company.

Ride in progress: Once you take on a ride request, the rideshare coverage is no longer in effect. Primarily because the commercial insurance provided by Uber or Lyft applies to the entire ride recorded by the mobile app.

Both Uber and Lyft impose a maximum coverage limit of $1 million per incident during this period. The coverage is the most robust during this period and usually includes bodily injury, property and vehicle damage.

What are some rideshare insurance options?

Rideshare insurance isn’t available from every insurance carrier or in every state. In general, larger insurers are more likely to offer it in the highest number of markets. For example, Farmers rideshare insurance is available in 30 states and counting. You can customize the coverage to include comprehensive and collision coverage, uninsured motorist coverage and
medical expense and personal injury protection.

You can additionally obtain rideshare insurance from Allstate, Geico, Progressive, MetLife, Travelers and USAA, to name a few.

What if I can’t buy rideshare insurance in my state?

If you want to protect yourself from potential financial losses, you should strongly consider buying commercial car insurance. Consider this as an option if rideshare insurance isn’t available to you.

You can also buy commercial car insurance if you prefer it to rideshare insurance. Commercial car insurance is usually more robust but also more costly.

Whether or not you ultimately buy rideshare insurance, you should notify your personal car insurance provider as soon as possible that you drive or intend to work for a ride-sharing company. Don’t wait until an accident to disclose this fact.  Your personal car insurance carrier can elect to terminate your coverage if they find out that you used your car for commercial purposes without notifying them.

About the author

Manasa Reddigari

Manasa Reddigari has tackled topics ranging from computer software to home remodeling in her more-than-a-decade-long career as a writer and editor. During her stint as a scribe, she's been featured by MileIQ, Trulia, and other leading digital properties. Connect with her on copyhabit.com to find out what she's been writing about lately.

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                    The Growth Center does not constitute professional tax or financial advice. You should contact your own tax or financial professional to discuss your situation.