uber insurance

Rideshare Insurance Guide For Uber & Lyft Drivers

The 2018 Rideshare Insurance Guide For Uber And Lyft Drivers

At Rideshare Central, we get a lot of questions from drivers about rideshare insurance. “What is rideshare insurance?” is the most common question, followed closely by “Do I need Uber insurance?” We know you probably have other questions on this topic. So we’ve put together a comprehensive guide that answers the above questions, and many of the other questions Uber and Lyft drivers are asking about rideshare coverage.

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Frequently Asked Rideshare Insurance Questions

Don’t I already have coverage through the Lyft or Uber Insurance Policy?

Yes. Both The Lyft and Uber insurance policies provides $100,000 in contingent liability coverage when you are online waiting for a ride request (period 1). They both also provide $1 million in liability coverage and $50,000 in collision coverage if you have an accident while you are on your way to pick up a passenger (period 2), or while a passenger is in the vehicle (period 3).

However, in most markets, neither Uber or Lyft provide collision coverage during period 1. Even worse, your personal auto insurance policy will not provide collision coverage if you have an accident while online for Uber or Lyft. Here’s how this could be a problem for a rideshare driver.

Say a driver is online with Uber and waiting for a passenger request (period 1) and has an accident that was their fault. No one is injured, but the driver’s car is damaged. Uber will not pay to fix the driver’s car because the Uber insurance coverage doesn’t take effect until a ride request comes in. If the driver’s insurance company knows the driver was online with Uber when the accident happened, they won’t pay for the car repairs either. In this case, the driver will be on the hook for all the vehicle repairs. To add insult to injury, the driver’s insurance company may cancel the policy after finding out the policyholder was driving for Uber. That seems like a lot of trouble, which the driver could have avoided if they had rideshare insurance or an insurance policy with a rideshare endorsement.

What is rideshare insurance (aka Uber Insurance)?

Basic rideshare insurance provides liability and collision coverage when you are online and waiting for a passenger request. Essentially, it extends your personal auto insurance into period 1. Once you accept a ride, Lyft or Uber’s insurance takes over. This type of insurance is often called gap coverage. If the driver in the example I gave above had this type of coverage, their insurance company would pay for their vehicle repairs.

USAASafeco, FarmersMercury, American Family, and Travelers are some of the companies offering gap coverage.

Extended rideshare insurance includes gap coverage, but also extends parts or all of your personal auto policy into periods 2 and 3.

State Farm, Geico, Progressive, Erie, and Metlife are some companies that offer extended rideshare insurance.

Do I need rideshare insurance?

Yes. If you’re going to drive rideshare, and you want to be fully covered, you absolutely need to get rideshare insurance. Some of the most heartbreaking stories I’ve heard are about drivers who had an accident while waiting for a ride request. Their insurance would not cover the repairs and usually cancelled the policy.

The fact is that you can’t depend on either Lyft or Uber insurance during Period 1. But now that rideshare insurance is more widely available for a reasonable cost, it’s easy to avoid this type of terrible situation.

Do I have to get rideshare insurance if I Drive With Lyft or Uber?

No. Lyft and Uber only require that a driver have their name on a personal auto insurance policy that was written in the state where the driver will be working. However, it’s still a very good idea to purchase a rideshare insurance policy.

Lyft and Uber only require a personal insurance policy because they don’t want uninsured drivers on their platforms. However, while the coverage levels on the Lyft and Uber insurance policies are pretty high, a driver may still face out of pocket expenses in the event of an accident. Both companies tend to shift the expense of accidents over to drivers, in the form of high deductibles, and the lower coverage levels during period 1. That’s why it’s incumbent on drivers to look out for themselves and make sure they have proper and complete auto insurance coverage. Spending a little now can save a lot down the line.

Why is it important to have rideshare insurance?

Peace of mind. It’s a lot cheaper to pay a little extra now to avoid a very expensive headache later. Having proper insurance is key if you want to avoid unnecessary costs. If you have good rideshare coverage, your expenses in the event of an accident will likely be a lot lower.

For example, if the accident happens during period 1, instead of having to pay the full cost of repairing your vehicle, you’ll only be responsible for the deductible. If the accident isn’t your fault, you probably won’t even have to pay that.

Certain rideshare insurance policies also can help lower your out of pocket expenses if you have an accident during periods 2 and 3. Even though Uber and Lyft provide coverage once you accept a trip request, your out of pocket expenses in the event of an accident can still be thousands of dollars. For example, Uber has a $1,000 deductible and Lyft’s is an enormous $2,500. Some rideshare insurance policies can lower your deductible costs for accidents during periods 2 and 3, and even cover rental car expenses.

I tried to get rideshare insurance once, but it wasn’t available in my state. Have things changed?

The current rideshare insurance situation is a vast improvement from a couple of years ago. At that time, very few companies offered any rideshare insurance coverage, and coverage was only available in a few states. Even if you could find rideshare insurance, it was usually very expensive.Most Uber or Lyft drivers at that point were forced to buy commercial insurance if they wanted full coverage while rideshare driving.

In most states, there are far more insurance options for rideshare drivers now. In fact, most places have at least two rideshare insurance options for Uber and Lyft drivers, and many have four or more. Companies like Erie Insurance and Mercury were two of the earliest entries into the rideshare markets like Pennsylvania and Illinois. In the past year, the large national companies like Allstate, State Farm, USAA, and Farmers have all started offering rideshare policies around the country.

Can I get rideshare insurance in my state?

We’re glad you asked. Unless you live in North Carolina, the answer is yes. Rideshare insurance is now available pretty much everywhere else, If you live in Texas, California, Idaho, Georgia, Florida, or even Hawaii and Alaska, you have at least one option for rideshare insurance. Nationally, there are now at least 15 companies that offer some type of rideshare insurance policy.

Even in Massachusetts, which resisted allowing rideshare coverage for a long time, you can now purchase a rideshare policy through USAA.

In New York City, drivers must carry commercial insurance, usually purchased through an insurance broker. In New York state, rideshare coverage is available, but unnecessary. A recently passed state law mandates that Lyft and Uber insurance cover drivers during period 1 (waiting for a ride request).

To see who is offering rideshare insurance in your state, head on over to our 50 state rideshare insurance database.

We’ve heard from some drivers that some insurance agents do not seem to be aware that their company offers rideshare insurance. To help with this issue, we’ve begun adding recommended insurance agents to our rideshare insurance database. These agents are familiar with the rideshare policies their company offers. If you know of a great rideshare insurance agent, let us know.

What do rideshare insurance policies cover?

Rideshare policies differ by insurance carrier, but there are two main types of rideshare coverage:

Rideshare Insurance Type 1: Extended Coverage

Extended coverage offers coverage during period 1, but also extends your personal auto insurance policy into periods 2 and 3. For example, Lyft and Uber provide very good liability coverage during periods 2 and 3, but their collision coverage have very high deductibles. If you have an extended coverage policy, you will only be responsible for the deductible on your personal auto insurance policy. That alone can save you hundreds or thousands of dollars.

Extended rideshare coverage differs from company to company. Some insurers offer a policy that provides coverage at all times, essentially replacing Uber and Lyft’s coverage entirely. Other companies offer a hybrid policy that adds to Uber and Lyft’s coverage. All extended insurance policies offer coverage during period 1.

Rideshare Insurance Type 2: Gap Coverage

Gap coverage extends your personal auto insurance into period 1, when you are waiting for ride requests. Essentially, this coverage fills the gap between your personal auto policy and when Lyft and Uber’s full coverage takes effect (period 2). This is the rideshare insurance option most drivers choose. It’s relatively inexpensive and offers coverage where Uber and Lyft’s coverage are weakest.

How much is rideshare insurance?

You can get gap coverage added to most policies for an extra $6 to $20 per month.

Extended coverage policies that offer protection during periods 2 or 3 generally cost more. While there is a lot of variability in the costs based on the amount of coverage you want, most extended rideshare insurance policies will cost $30 to $50 more per month. While this seems like a lot, these policies do provide the most coverage and protection in the event of an accident.

Does rideshare insurance cover both Uber and Lyft?

Almost all insurance companies offer rideshare insurance that covers both Uber and Lyft. Metlife is the only exception, as they only cover drivers when they are on the Lyft platform.

Most insurers only offer coverage for drivers on TNC platforms like Uber and Lyft. If you are driving for Amazon Flex, Instacart, DoorDash, Grubhub, or another non transportation network platform, be sure to check with the rideshare insurers in your state to see if they offer coverage. Don’t assume that if your rideshare insurance coverage is good for Lyft and Uber, that it’s good for every platform.

Do Uber and Lyft insurance provide enough coverage?

It depends how much coverage you want to have. In terms of liability coverage when you’re on the way to a passenger or have a passenger in the car, their coverage is pretty high – $1,000,000. However, it’s still lower than the liability coverage amounts on most commercial policies. Certain extended rideshare insurance policies offer a higher amount of coverage.

When you’re waiting for a ride request, Uber and Lyft’s liability coverage is pretty low – $100,000. Rideshare Central recommends at least $300,000 in liability coverage at all times. The reason is that if an accident results in high medical expenses, $100,000 is often not enough. Medical bills add up quickly and if it’s a bad accident where someone winds up in the hospital, the costs can easily exceed $100,000.

Final Take: Driving for Uber or Lyft without rideshare insurance makes no sense.

In 2018, rideshare insurance or an auto policy with a rideshare endorsement is usually a very inexpensive addition to your auto insurance costs. Usually, basic rideshare insurance only adds $6 to $20 a month to your auto insurance costs. Given that, it simply makes no sense to not have rideshare insurance.

Think about it. You can pay a few extra bucks a month, and be fully covered while driving for Lyft or Uber. Or, you can not get a rideshare insurance policy, and risk thousands of dollars in unnecessary expenses that you could have avoided.

Seems like a pretty easy choice to me.

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