Should You Have Rideshare Insurance If Youre An Uber or Lyft Driver – Forbes Advisor

If you have a job as a driver for a company like Uber or Lyft, rideshare insurance can provide critical coverage if you’re in a car accident. while rideshare companies offer some coverage, it could be woefully inadequate and you may have to pay out of pocket for car repairs and medical bills.

Rideshare insurance is a good option for a driver who wants to bridge the gap between their personal auto insurance and the coverage offered by rideshare companies. So before you activate your rideshare app and pick up a passenger, here’s what you need to know.

Reading: Which insurance companies cover rideshare

the stages of carpool driving

To understand rideshare driving insurance, it’s important to know the three phases while a rideshare application is active:

  • Available: The driver is available to pick up a passenger.
  • en route: the driver has accepted a trip and is on his way to pick up the passenger.
  • on the trip: the driver has picked up the passenger and is on the way to the passenger’s destination.
  • When an Uber or Lyft rideshare app is disabled, your personal auto insurance applies. Once your rideshare app is activated, Uber and Lyft provide some coverage. knowing the gaps between that coverage is key to making sure your property is protected. Here’s a breakdown of the three driving periods and what Uber and Lyft cover.

    coverage breakdown

    Now, you may be wondering what some of those terms mean. Here are definitions related to driver insurance provided by rideshare companies.

    civil liability coverage

    This pays for bodily injury and property damage caused to a third party by a car accident. a third party is someone or something other than its driver or vehicle. For example, if a rideshare driver rear-ends another car, liability insurance pays the other driver.

    bodily injury coverage for uninsured and underinsured motorists

    This coverage pays for injuries sustained by a rideshare driver and their passengers if a car accident occurs during a rideshare and another driver is at fault and underinsured. this coverage could also apply in the event of a hit and run accident.

    Coverage limits provided by the rideshare insurance company will vary by state.

    contingent collision and comprehensive coverage

    See also: Car Insurance for 19-Year-Olds | Bankrate

    If you have comprehensive and collision coverage in a personal auto insurance policy, the rideshare company provides comprehensive and collision coverage for the time you are picking up a passenger or have a passenger. a deductible (which can be substantial) reduces the payment of a claim for these coverages.

    If you don’t have comprehensive and collision coverage on your vehicle, Uber and Lyft won’t provide it either.

    Does my personal auto insurance policy cover rideshare driving?

    Personal automobile coverage generally excludes rideshares. That’s because your auto insurance company has priced the policy on the assumption that you, your family and/or friends are driving, and that you’re not making money driving and putting a lot of extra miles in your car.

    As a result, a rideshare driver’s personal auto policy will generally not provide coverage while “on the job.”

    many insurers now offer rideshare insurance, including allstate, farmers, liberty mutual, progressive, state farm, and usaa.

    minding the gap

    A rideshare driver may be satisfied with the insurance provided by the rideshare company, especially if the driver only has the minimum personal auto insurance required by the state. In those cases, a million dollars in Uber liability coverage might seem like a huge bonus.

    but there can still be gaps, which is where rideshare insurance comes in. For example, rideshare companies don’t typically offer comprehensive or collision insurance when the app is activated and you’re waiting for a ride request. and a personal auto policy that includes collision and comprehensive probably won’t cover that period. therefore, if you accidentally hit a pole, you will not have insurance for the damage.

    “Without additional rideshare coverage from their personal auto insurer, drivers may find that their current coverage does not apply to a loss that occurs while acting as a rideshare driver,” says Luis Sahagun, a spokesman for the insurance for farmers.

    See also: Car Repair Insurance: How to Repair Your Car After a Crash – ValuePenguin

    In some states, a rideshare driver may purchase a rideshare endorsement or add-on to a personal auto insurance policy. This endorsement can help fill in the gaps between the rideshare company’s coverage and the driver’s personal coverage. for example, a rideshare endorsement can pay the $500 difference between a rideshare company’s $1,000 deductible for collision coverage and a $500 deductible for driver’s collision coverage.

    insurance companies that offer rideshare insurance

    These are the insurance companies that offer rideshare insurance coverage, the types of policies, and what each policy covers.

    Please note that rideshare insurance may not be available in all states and what is covered may vary by state. It’s a good idea to talk to your insurance agent to make sure you understand what your policy specifically covers.

    The cost of a rideshare insurance policy or endorsement varies between companies. State Farm says its rideshare insurance endorsement typically adds 15% to 20% to the policyholder’s premium. usaa says its rideshare add-on is as low as $6 per month.

    “I highly recommend that all rideshare drivers have rideshare insurance,” says Harry Campbell, former rideshare driver, founder and owner of the Rideshare Guy blog and podcast.

    what if you hide your driving job?

    Not telling your insurance company that you’re a rideshare driver could have negative consequences, says Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry trade group.

    For example, an insurer may deny a claim for damage to a rideshare driver’s vehicle in an accident if the driver does not have a rideshare policy or a rideshare endorsement. or the insurer could leave the driver as a client.

    “This could be financially devastating for someone who drives for business and has no financial protection,” says Worters.

    sahagun says farmers rely on their customers to report when they’ve decided to become rideshare drivers, since the insurer has no other way to collect that information. therefore, it is up to rideshare drivers to know what actions are needed to obtain proper protections while on the job.

    See also: How Much Is an Eye Exam Without Insurance?

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