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Rideshare Insurance 101

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 while you may have wondered whether you can actually make a living as an Uber driver, you might not have bothered to think about another crucial number: rideshare insurance.

Millions of drivers gleefully turn their apps on every day and wait to pick up a paying passenger without once giving thought to what would happen if they got into an accident. Most of them assume that the platform they’re using will foot the bill completely.

After all, you’re working for them, right?

The truth isn’t so cut-and-dry. Let’s take a deep dive into the murky world of rideshare insurance.

 

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.

front seat passenger seen from behind

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.

hand opening Uber app on cell phone

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.

 

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.

attractive man in front car seat with open door

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.

 

Conclusion

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.

At Harry Levine Insurance, we specialize in both personal and commercial auto insurance and have the knowledge and experience you expect in an insurance agent.

About the Author

Jason Levine

Jason received a Masters of Science & Management in Risk Management & Insurance from Florida State University. He has been with Harry Levine Insurance for 9 years and handles the leadership of daily operations. He was the 2013-2014 Florida Association of Insurance Agents Young Agent Council's Agent of the Year. Currently serves on FAIA Board of Directors.

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