Driving for Uber or Lyft changes when your auto insurance applies.
Here’s how what is rideshare insurance works, where coverage gaps can show up, and what to do next.
With millions of drivers between them, ridesharing platforms like Uber and Lyft remain popular for anybody with a dependable car looking to make some extra cash.
But here’s the part a lot of drivers don’t think about until something goes wrong: insurance. What is rideshare insurance? It’s coverage designed to help fill the gap between personal driving and driving with your app on—so you’re not stuck learning about exclusions after an accident.
Your Personal Auto Insurance Isn’t Enough
When you signed up under your current personal auto insurance policy, the insurance company calculated your rates and agreed to insure you based their perception of your level of risk. And, unless you disclosed that you were working for a ridesharing app, the insurance company did not agree to take on that additional risk.
If you file a claim related to your work with Uber, Lyft, or one of their competitors, the insurance company will likely deny your claim or even drop you altogether.
So what can you do to make sure you’re protected while driving passengers around? Rideshare insurance.
How Rideshare Insurance Works
The most popular rideshare platforms—Uber and Lyft—provide different levels of coverage based on your timeline of logging in to the app, picking up a passenger, and taking them to their destination.
Both companies divide your time into four “periods.” Which period you are currently in determines your level of coverage.
Period 0
Both Uber and Lyft determine Period 0 as the time you are not logged into the app.
While are are logged out of the app and going about your personal business, you are not covered by their insurance policies. If you get into an accident during this time, you would need to file a claim with your personal auto policy.
Period 1
During this period, you are logged into the app but still waiting for a ride request.
If you get into an accident during Period 1, both Uber and Lyft will provide liability coverage, but have the following limits:
- $50,000 in bodily injury per person
- $100,000 in bodily injury per accident
- $25,000 in property damage per accident
Your personal auto policy won’t cover you unless you have purchased a rider to your existing policy.
Period 2 & 3
Once you accept a passenger through the app (Period 2) and are driving them to their destination (Period 3), you are covered by whatever level of insurance the ridesharing platform offers.
Uber and Lyft both cover liability claims (up to $1,000,000), uninsured/underinsured motorist liability, and comp and collision coverage (up to cash value). It’s worth noting that comp and collision coverage is contingent (meaning you must already have it on your personal auto policy) and has a deductible that you must first meet ($1,000 for Uber; $2500 for Lyft).
Coverage levels can vary between companies, so it is important to research your “employer” of choice so you understand their policies and coverage levels.
What Does Rideshare Insurance Cover?
Rideshare insurance is meant to help you avoid surprises during app-based driving. Depending on the insurer, it may be offered as a rider (also called an endorsement) on your personal auto policy, or as a separate policy designed for drive-for-hire.
What it covers depends on the option you choose, but the goal is usually the same: reduce coverage gaps between your personal auto policy and the insurance provided by the rideshare company during the different periods.
A simple way to think about it is this:
- Your personal auto policy is built for personal driving.
- The rideshare company coverage changes based on what you’re doing in the app.
- Rideshare insurance is often the bridge that helps those two line up more cleanly.
Because details vary, it’s smart to confirm exactly what your policy does and doesn’t cover when the app is on.
Mind the (Coverage) Gap
Since Uber and Lyft both have coverage limits during Periods 1, 2, and 3, it’s smart to look into the various options you have for increasing your coverage as a rideshare driver.
Your best option is to notify your personal auto insurer that you are driving for a ridesharing app and speak to your insurance agent about your gap insurance options. S/he may be able to point you toward a rider or a separate policy that will provide more comprehensive coverage.
As the drive-for-hire market evolves, more and more companies are developing rideshare insurance plans that straddle both personal and commercial use and are designed specifically for Uber, Lyft, GrubHub, Shipt, and Instacart drivers.
If you want the most comprehensive coverage, consider purchasing a commercial auto insurance policy. Premiums are usually higher than personal auto policies, but the coverage limits are higher as well.
How Much Is Rideshare Insurance?
As with most insurance questions, there isn’t one flat price for rideshare insurance. Cost depends on how you drive and which option you choose (a rideshare endorsement on a personal policy versus a separate policy).
A few common factors that can affect what you pay include:
- Whether you need an endorsement or a separate rideshare/commercial-style policy
- Your driving record and claims history
- Your vehicle and how it’s used (including how often the app is on)
- Your deductibles, coverage limits, and other policy choices
- What’s available in your state (including Florida)
If you’re trying to budget, the most useful question isn’t “What does rideshare insurance cost?” but “What would an uncovered accident cost me if I’m in the wrong period?” A quick policy review can usually tell you where you’re exposed.
Quick Checklist: Do You Need Rideshare Insurance?
If any of these are true, it’s worth a conversation with an agent before you drive again:
- You drive with the app on regularly (even part-time)
- You’re often in Period 1 (logged in, waiting for a request)
- You assume Uber/Lyft will cover everything automatically
- You do delivery work too (food, groceries, packages)
- You’d struggle to pay out of pocket after an accident if coverage is limited or denied
Insurance That Covers You
As with all matters of insurance, there is no cut-and-dry formula for determining whether you have enough coverage.
It’s best to have an upfront discussion with an independent insurance agent to determine the right level of rideshare insurance for you.
We understand that being told you need rideshare insurance can come as a shock, but we’d rather you be shocked at this information rather than shocked at a hefty accident bill after finding out you’re not covered!
At Harry Levine Insurance, we specialize in both personal and commercial auto insurance and have the knowledge and experience you’d expect in an insurance agent. Call today to find the right policy for you.
