The rideshare industry has become a popular way for anyone with a car to generate additional income or create a freestanding career. In fact, full-time drivers made around $36,525 on average in 2018.
While the extra cash alone is enticing for many, it’s important to consider all the factors before diving into a career with Uber or Lyft. These rideshare companies provide drivers with insurance coverage, but many drivers don’t realize that they aren’t fully covered from the time they get in their car to the time they hang up the keys.
Rideshare insurance, typically purchased as an add-on to a personal auto policy, can help to protect drivers from potential gaps in coverage. However, rideshare insurance bridges these gaps in coverage and keeps drivers protected even before they begin their first trip.
Table of Contents
- What is Rideshare Insurance and Do I Need It?
- Rideshare Insurance Providers and Costs
- What if My Area Doesn’t Have Rideshare Insurance?
- How to Purchase Rideshare Insurance
- What Happens if I’m in an Accident While Driving for Uber or Lyft?
Rideshare insurance is a type of insurance coverage, typically purchased in addition to a personal auto policy. When driving for a rideshare company like Uber or Lyft, drivers may be left uninsured during particular times of their drive.
Rideshare companies divide the duration of a ride into three phases or periods:
- Period 0: The app is off and the driver is not logged in. A personal auto policy covers the driver.
- Period 1: The app is on and the driver is waiting for a request. Uber and Lyft offer limited liability coverage. Personal auto policy without rideshare insurance does not cover the driver. During this period, the driver may be without full coverage.
- Period 2: The driver has accepted a request from a passenger and is en route to pickup. Uber insurance and Lyft insurance provide full coverage.
- Period 3: The driver transports passengers from pickup to drop-off. Uber insurance and Lyft insurance provide full coverage.
Uber and Lyft provide coverage for certain periods, but do not provide full coverage for the entire duration of the drive. As a result, a gap in coverage during Period 1 could leave drivers vulnerable. Additionally, a personal auto policy does not provide the necessary coverage to protect drivers in these coverage gaps.
Rideshare insurance purchased as an add-on to a personal auto policy offers the protection drivers need during gaps in coverage, particularly during Period 1. While Period 1 may be brief, a collision during this window could be costly to an uninsured driver.
While rideshare insurance covers the gap when drivers may be unprotected, there are other benefits to purchasing a rideshare insurance policy. Drivers may be able to write these expenses off when filing their taxes, recover the cost of any property damaged in an accident, and enjoy additional benefits provided by the company offering rideshare insurance like roadside assistance, safe-driving discounts, and insurance bundles.
Rideshare Insurance Providers and Costs
Allstate
Allstate insurance offers coverage for rideshare drivers with their Allstate Ride for Hire policy. This policy is typically $15–$20 per month.
| AK, AL, AR, AZ, CA, CO, CT, DC, DE, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NM, NV, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY |
Erie Insurance
Erie rideshare insurance puts a “business use” designation on your personal auto insurance policy. This policy is $9–$15 per month.
| DC, IL, IN, KY, MD, OH, PA, TN, VA, WI, WV |
Farmers
Farmers rideshare insurance allows drivers to fill the coverage gap when they are logged into the app but haven’t accepted a ride. Since commercial use of a personal vehicle disqualifies the standard insurance policy, Farmers allows you to add rideshare insurance to this existing policy. The policy is around $150 per month.
| AL, AR, AZ, CA, CO, GA, IA, ID, IL, IN, KS, MD, MI, MN, MO, MT, ND, NE, NJ, NM, NV, OH, OK, OR, PA, SD, TN, TX, UT, VA, WA, WI, WY |
Geico
Geico offers rideshare insurance that takes the place of a personal auto policy, meaning drivers can easily manage one policy, rather than a personal auto policy and a rideshare add-on policy . The policy is usually $150 per year.
| AL, AR, AZ, CA, CO, CT, DC, DE, FL, IA, ID, IL, IN, KS, LA, MA, MD, ME, MN, MO, MS, MT, ND, NE, NH, NM, OH, OK, OR, PA, RI, SC, SD, TN, VA, VT, WA, WI, WV, WY |
Mercury Insurance
Mercury rideshare insurance can be added on to a personal auto policy and protects the driver from before they log in to the rideshare app to the time they drop off their passengers. Mercury claims that the policy add-on is as little as $6 per month depending on premiums.
| AZ, CA, GA, IL, NV, OK, TX |
Progressive
Progressive offers ridesharing insurance as an add-on to personal auto policies in most states. In the states where a rideshare endorsement on a personal policy isn’t available, Progressive will petition for a commercial policy.
| AL, AR, AZ, CO, CT, DC, FL, GA, IA, ID, IL, IN, KY, LA, MA, ME, MI, MN, MO, MS, ND, NE, NM, OH, OK, PA, RI, SD, TN, TX, UT, VA, WA, WI, WV, WY |
State Farm
State Farm offers an add-on rideshare policy to an existing personal auto policy. Rideshare insurance through State Farm typically costs 15–20% of the premium.
| AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, IA, ID, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, ND, NE, NH, NJ, NM, NV, OH, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY |
Travelers
Travelers offers Limited Ride Sharing coverage in Colorado and Illinois — that’s it. This endorsement on an existing policy provides auto coverage after drivers open a mobile ridesharing app, but before connecting with a passenger.
| CO, IL |
USAA
Though USAA is only available to veterans, military members and their families, rideshare insurance purchased through them effectively fills the gaps in coverage provided by rideshare companies. The policy is as little as $6 per month.
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What if My Area Doesn’t Have Rideshare Insurance?
Insurance for Uber drivers (or those driving for similar rideshare companies) may not be available in every state through a current personal auto policy provider, but it’s still possible to get additional coverage. Consider switching to a provider that offers a rideshare policy add-on, or go commercial. Commercial insurance provides protection for any vehicle used for business, including a car driven for Uber or Lyft.
While commercial auto insurance offers coverage to drivers without access to rideshare insurance, the cost of insurance may be significantly higher. According to TrustedChoice, the average commercial policy for a passenger car is $1,200 to $2,400 annually.
How to Purchase Rideshare Insurance
Rideshare insurance is not a stand-alone policy. It is either an addition to an existing personal auto policy or a hybrid policy. Because it must be purchased as an add-on, rideshare insurance must come from the company providing personal auto coverage.
Before applying for rideshare insurance, collect this information:
- Make, model and year of the vehicle
- Rideshare companies worked for (if applicable)
- Average number of monthly rideshare drives (if applicable)
- Average number of miles driven per trip (if applicable)
- Copy of valid driver’s license
- Copy of vehicle registration
- Copy of vehicle title
- Policy number for current personal auto policy
Most major insurance companies offer a version of rideshare insurance, though coverage may not be available in every state.
Approach the company providing personal auto insurance coverage to learn more about their rideshare insurance options.
What Happens If I’m in an Accident While Driving For Uber or Lyft?
During Period 2 and 3 (from the time the driver matches with a passenger until the driver drops the passenger off), coverage offered by Uber insurance and Lyft insurance varies depending on the scenario:
- For rideshare drivers who cause an accident, both Uber and Lyft provide coverage up to $1 million in total damages.
- For rideshare drivers who are in an accident caused by another driver with little or no insurance, insurance for Uber drivers covers damages and injuries up to $1 million. Lyft insurance coverage varies by state.
It is also possible to draw on comprehensive and collision coverage from Uber and Lyft insurance as long as the personal auto policy includes the same coverage. However, the deductible may be high and the policy only applies once a ride request has been accepted or when there are passengers in the car.
During Period 1 (when a driver is waiting for a ride request), a personal auto policy is most likely responsible for coverage. For rideshare drivers who cause an accident during this period, a claim should be filed with their personal auto insurance company unless state law or the rideshare company’s policy states otherwise. If the personal claim is denied or only partially reimbursed, the rideshare company’s coverage begins. However, coverage from the company in this scenario is limited and may not cover drivers fully.
In The Event of an Accident While Driving For Lyft
Lyft insurance covers rideshare drivers in Periods 2 and 3 of the drive. During Period 1, drivers could be at risk of limited or no coverage if they do not have a personal rideshare insurance policy.
While Period 1 may leave rideshare drivers at risk of uninsured damages, a separate rideshare insurance policy gives drivers the protection they need.
In The Event of an Accident While Driving For Uber
Insurance for Uber drivers offers slightly more coverage than Lyft, though drivers are still at risk during certain periods of the drive.
For those considering a career or side job (ride-hustle) as a rideshare driver, having full coverage through an insurance policy is key to avoiding costly damages in the event of an accident. While rideshare companies like Uber and Lyft offer their own insurance, these policies do not fully cover a driver at all times.
A separate rideshare insurance policy added to a personal auto insurance policy provides the protection drivers need, from the time they log onto the rideshare app to the time they drop off their final passengers.
Related links:
What are the cheapest car insurance companies?
What is the best car insurance for those with low income?
The post Rideshare Insurance Options for Uber and Lyft Drivers appeared first on The Simple Dollar.
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