Uber, Lyft, and insurance companies divide a rideshare trip into three periods. If a rideshare driver has an accident while waiting for a ride request (period 1), they will often need to pay for the damages. This is because Uber and Lyft only provide coverage when the driver is on the way to pick up a passenger (period 2), or the passenger is in the vehicle (period 3).
Regular personal auto policies will not cover accidents that occur during period 1. In fact, they will not provide coverage at any time when a driver is online with a rideshare company.
This creates a situation where there is essentially a gap in coverage for Uber and Lyft drivers. While waiting for a ride request, drivers are not covered by their personal auto policy, and they’re also not covered by Uber or Lyft. Rideshare insurance helps eliminate this problem by offering coverage during period 1.
Even though rideshare services like Uber and Lyft are quite different compared to the traditional taxi services, their drivers still require proper insurance. So, if you drive for Uber or Lyft, it’s very important to get rideshare insurance so you’re fully protected every minute you’re on the road.
Where can you get rideshare insurance?
Luckily, Uber and Lyft drivers can now get rideshare insurance in most states. In fact, 48 states now have at least one company offering rideshare insurance for Uber and Lyft drivers. And while adding rideshare coverage does add a little to the premium price, it’s usually only an extra $5 to $20 per month. Also, it’s well worth it since you’ll have the protection you need in the event of an accident.
Is rideshare insurance really necessary?
Yes, it is necessary. To reiterate, insurance companies will not cover any issues (like accidents) that occur while driving for Uber or Lyft. The reason is simple, insurers consider driving for Uber or Lyft commercial activity with increased risks. Regular auto policies do not cover commercial activity because those policies don’t take into account the additional miles (more miles, more risk) you’ll be on the road as a rideshare driver.
So, getting rideshare insurance is a very good idea if you want to lower your risks while also receiving the best possible coverage on the market. Plus, if you have rideshare insurance, your insurer will know that you are driving for a ride-sharing company and you won’t be at risk of having your policy cancelled because you drive for Uber or Lyft.
Additionally, some rideshare insurance policies offer coverage that replaces or enhances Uber and Lyft’s coverage during periods 2 and 3. Allstate, for example, offers rideshare coverage that can help you cover the high Uber ($1,000) and Lyft ($2,500) deductibles. This can significantly lower your out of pocket costs if you have an accident.
[su_box title=”Recommended Agents” style=”soft” box_color=”#d1a927″ title_color=”#d1274f”]California – Allstate – Doug Eisold
Washington – Allstate – Colin Johnson[/su_box]
Is it safe to drive for ridesharing companies without proper insurance?
No, it’s actually quite dangerous, and can wind up being enormously expensive. At least a few times a month, I hear about a driver who had an accident during period 1 without proper rideshare insurance. In most cases, the driver was on the hook for more than $5,000 in repair expenses. All of these situations could have been avoided if the driver had paid the extra $5 – $20 per month for rideshare insurance. Thankfully, no one was injured in the cases I heard about, or the costs would have been even higher.
While it’s true that rideshare companies do offer some protection, you have to read their terms and conditions to see exactly what they cover. When you do, you’ll notice they don’t cover everything and much of their coverage is contingent. This makes it hard for you to get the support you need and makes it very challenging to drive for these companies without any added protection.
The fact is that you can’t rely on the basic protection afforded by rideshare companies. So, any additional protection you can get will be very helpful. Plus, you need to think about your safety too. Most accidents appear out of nowhere, so you never know when you need the right protection on the road. That’s why having rideshare insurance makes a lot of sense. You have constant protection regardless of what happens, for a small increase in your monthly premium. This can come in handy, and it also offers that peace of mind that you are looking for while you drive for Uber or Lyft.
Is this supplemental or regular coverage?
Rideshare insurance is considered to be supplemental coverage. It’s not necessary for everyone. In fact, only people that drive rideshare even need this coverage. However, every rideshare driver should have rideshare coverage. So, if you are an Uber or Lyft driver, then it’s a very good idea to opt for this type of coverage. It makes a lot of sense, it’s inexpensive, and it delivers all the convenience you want in a single package.
One thing to keep in mind about rideshare insurance is that the rates vary from one state to the other, and from company to company. So, coverage in certain states, or from certain companies may be more expensive than other states or companies. Certain states still only have one or two insurance companies that offer rideshare coverage. In those states, premiums may be slightly higher. Also, some insurers offer additional coverage outside of period 1. Those policies also tend to be more expensive.
[su_box title=”Protecting Yourself – Incorporation” style=”soft” box_color=”#d1a927″ title_color=”#d1274f”]
All rideshare drivers should consider incorporating or setting up an LLC. Having a corporation or an LLC can provide you with additional legal protection in the event of an accident or other incident that occurs while you’re driving for Lyft or Uber.[/su_box]
Rideshare insurance is now easy and affordable to buy
The thing to keep in mind about rideshare insurance is that it’s easy to customize according to your needs. You can select how much coverage you need, and what type of additional coverage you want.
Most, but not all, insurers also allow drivers to add rideshare coverage to an existing policy. When companies first started offering rideshare insurance, this wasn’t the case. You had to purchase a new policy if you want rideshare insurance.
Given the current availability and affordability of rideshare insurance, it simply makes no sense to go without it if you drive for Uber or Lyft. It’s usually very inexpensive, and helps eliminate many of the issues discussed without a lot of effort. So, if you drive for rideshare companies, it’s very important to purchase rideshare insurance right away, or add it to your existing policy. Doing so will help remove the stress you have on the road, since you know that you will be properly covered if anything happens.
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