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Lyft and Uber Insurance Coverage

Lyft and Uber are the two largest on-demand rideshare companies in the U.S., and lots of smaller taxi companies have followed in their wake: Via, Gett, Curb, zTrip, Jayride, Arro, Ola and Didi, among others.

If you're thinking of motoring for a taxi company as a side job or it's already your full-time gig, you need to know about Lyft and Uber insurance, rideshare driver coverage and options for your own personal auto insurance.

Wait, How Much Does a Rideshare Driver Make?

If you need a part-time job, driving for Uber, Lyft or another company may not be a bad idea. If you enjoy being in a vehicle all day, you'll love the work. However, unless you're working during "peak hours" (very early and very late) every day, it'll be hard to make a livable income. As a side gig, it's a great way to supplement your income, especially if you can squeeze in a few peak hours during the week. According to The Street, a financial news website, here's how the pay breaks down, on average:

Pay per hour: $8.55-$11.77

Pay per month: $364, on average (with a median of $155 per month)

Pay per year: $36,525, on average, for full-time drivers

Of course, some people work a lot, some people not so much. Some people live in a densely populated area, others live in the middle of Wyoming. But in the end, the more you work, the more you'll make.

Well, What Do Uber or Lyft Drivers Make?

If you want to make $50,000 a year, you have to provide about 60 rides a week for Uber and about 84 for Lyft. If you drive less than 35 hours a week, you're making less. According to Ridester, which tracks the on-demand transportation industry, earnings for Lyft and Uber drivers "fall at approximately the same national average per month, but Lyft drivers earn more in tips. Interestingly, the drivers who work on both platforms earn more on Uber."

Writing for the Business Insider in October 2019, rideshare driver Clarke Bowman reports on working for both taxi companies. Winding up his article, Bowman says, "Two trips on Uber for $22.95 and three trips on Lyft for $24.84, for a grand total of $47.79. I worked for three hours and four minutes, making a not-so-great $15.58 per hour. I drove 50.1 miles."

What Are the Uber, Lyft Driver Requirements?

If you're 21 or older, you can drive for Uber. The same goes for Lyft, but you have to be 25 or older if you're cruising in a big city. You'll need a four-door car, truck or minivan with seatbelts for (at least) five passengers, which includes the driver. Of course, your car must pass inspection. When conducting their background checks, both companies look at many of the same areas:

  • Driver's license (an out-of-state license is fine)
  • Driving history
  • Vehicle identification number
  • Vehicle state registration
  • Personal liability coverage
  • No major moving violations (DUI, reckless driving) within the past seven years
  • No criminal record

You always need to keep your car clean, inside and out. Count on regular car washes and possibly even some detailing. Oh, and it goes without saying: You should like people and not be too skittish about strangers getting in your car!

Does Personal Liability Coverage Cover Rideshare Drivers?

Regular auto insurance may not cover a driver using their vehicles for commercial reasons. Also, there is a high probability that if you are involved in an accident that is investigated, your insurance company will find out. In some cases, personal auto insurance policies have been canceled upon discovering the insured party utilized their car for rideshare service purposes without rideshare insurance.

Rideshare policies offered by auto insurance companies are typically much cheaper, on average 300% cheaper, than commercial auto insurance policies. Rideshare insurance coverage provided by Uber or Lyft may not be enough to cover the entire cost of an accident, leaving the driver responsible for paying the difference out of pocket. Additionally, private auto insurance policies may offer a lower deductible than the above-mentioned Lyft or Uber deductibles. Remember, deductibles must be paid out-of-pocket before any insurance coverage kicks in.

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Lyft, Uber Auto Insurance for Drivers: 1, 2, 3

Technically, you're covered by each company's commercial insurance from the moment you turn on the rideshare app till the moment you turn it off. Outside of that specific time period, you are responsible for your own insurance.

Each company backs up their driver-contractor with motorist bodily injury coverage, property damage liability and add-on insurance. But this car insurance is unusual because it offers three different coverage packages for three separate situations. Let's look at each situation, the coverage and the coverage limits.

No. 1: Waiting for a Ride Request

This insurance applies when your rideshare application is on, but you're not matched with a customer.

UBER

  • Auto liability: up to $75,000 per person for bodily injury, $150,000 per accident for bodily injury and $25,000 per accident for property damage
  • Personal injury: up to $50,000 per person
  • Underinsured/underinsured motorist coverage: up to $25,000 per person/$50,000 per accident for bodily injury; up to $50,000 per person/$100,000 per accident for death
  • Contingent collision and comprehensive: N/A

LYFT

  • Auto liability: up to $50,000 per person for bodily injury, $100,000 per accident for bodily injury and $25,000 per accident for property damage
  • Personal injury: N/A
  • Underinsured and underinsured motorist: N/A
  • Contingent collision and comprehensive: N/A

No. 2: En Route to Customer

This insurance applies the moment you've accepted a ride request and you're on your way to pick up the customer.

UBER

  • Auto liability: up to $1.25 million for all bodily injuries and property damage per accident
  • Personal injury: up to $50,000 per person
  • Underinsured and underinsured motorist: up to $1.25 million per accident
  • Contingent collision and comprehensive: up to and the lesser of actual cash value or cost of with $1,000 deductible

LYFT

  • Auto liability: up to $1 million per accident
  • Underinsured and underinsured motorist: up to $1 million per accident
  • Contingent collision and comprehensive: up to and the lesser of actual cash value or cost of with $2,500 deductible

No. 3: En Route to Destination

This insurance applies when you're taking the passenger to their desired location.

UBER

  • Auto liability: up to $1.25 million for all bodily injuries and property damage per accident
  • Personal injury: up to $50,000 per person
  • Underinsured and underinsured motorist: up to $1.25 million per accident
  • Contingent collision and comprehensive: Up to and the lesser of actual cash value or cost of with $1,000 deductible

LYFT

  • Auto liability: up to $1 million per accident
  • Underinsured and underinsured motorist: up to $1m per accident
  • Contingent collision and comprehensive: up to and the lesser of actual cash value or cost of with $2,500 deductible

So, while your working for Uber or Lyft, they've got you covered.

Do Lyft, Uber Drivers Pay More for Insurance?

If you start working for Lyft or Uber, you must report it to your insurance company. Since personal auto insurance is tailored to your specific circumstances, your personal auto insurance policy will change and your premium will increase. Rideshare insurance accounts for this increase.

While you don't need a commercial insurance, there are gaps between your own personal auto insurance and Uber's and Lyft's insurance. For a minimal amount of money, this gap can be covered by rideshare coverage—also called a "rideshare endorsement." Your insurance company will "endorse" you.

What Is Rideshare Coverage?

But there's one funny situation we haven't discussed: When you've finished your last rideshare trip for the day, there is a short gap in policy coverage between waiting for payment and turning off the app. If another vehicle hits you while you're idling during this time, it's an out-of-pocket expense because neither insurance covers this event. That's where rideshare coverage comes in.

Rideshare insurance is not very expensive, but it is an important form of protection if you're working as an Lyft or Uber driver. Also, your personal insurance company will require that you get rideshare insurance, so your premium will increase.

Rideshare Coverage Options:

Remember, rideshare insurance varies from state to state. In fact, coverage varies from state to state depending on whether you are with Lyft or Uber. Here are some basic rates for coverage by state.

USAA

USAA's rideshare insurance can cost as little as $6 more per month and can be added to an existing auto insurance policy. USAA's rideshare insurance is less expensive than other rideshare endorsements. However, USAA's rideshare insurance is only offered for rideshare drivers who have served in the military and spouses or children of a current USAA member. The USAA product is available in: AL, AZ, CA, CO, GA, IA, IL, IN, KS, KY, MA, MD, ND, NE, NV, OH, OK, OR, TN, TX, WA, WY

Farmers

Farmers' rideshare insurance policy averages about 25% of the cost of a personal policy. Like USAA's coverage, Farmers' rideshare product is an add-on extension of an already existing personal auto insurance policy. Farmer's policy covers getting behind the wheel for personal use and while the rideshare application is open, waiting for a passenger. Thes policy provides no coverage when the rideshare company's coverage is in effect. The Farmers' product is available in: AL, AR, AZ, CA, CO,FL (under the Foremost brand), GA, ID, IL, IA, KS, MD, MI, MN, MT, NE, NV, New Jersey, NM, ND, OH, OK, OR, TN, TX, UT, WI

Allstate

Allstate's rideshare insurance policy, also known as Allstate Ride For Hire, is available for an additional $15 - $30 per year on top of a personal auto policy. Ride For Hire covers drivers while they are looking for a passenger, and can help provide additional coverage for an accident with a passenger in the car. The Allstate product is available in: AZ, CA, CO, DC, GA, IA, IL, IN, KY, KS, MD, ME, MI, NV, OH, OK, RI, SC, TN, TX, UT, WA, WI

State Farm

State Farm rideshare insurance coverage is also is an extended personal auto policy. The State Farm policy is not a modified commercial policy. The State Farm product is available in: AL, AZ, CA, CO, CT, DE, DC, FL, GA, ID, IN, KS, KY, LA, ME, MI, MN, MS, ND, NE, New Hampshire, NJ, NM, OH, OK, OR, SC, TN, TX, UT, VA, WA, WI, WV

Mercury Insurance

For about $73 extra per year, drivers can purchase additional rideshare insurance if they already have an existing personal auto insurance policy through Mercury. The Mercury product is available in: AZ, CA, GA, IL, NV, OK, TX

MetLife

MetLife Auto & Home's Lyft endorsement has coverage for Lyft drivers at any of the three rideshare time periods. Premiums are based on miles driven. The MetLife product is available in: AL, AK, AZ, AR, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IO, KS, KT, LA, ME, MD, MA, MI, MN, MS, MO, NE, NV, New Hampshire, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

SmartFinancial Knows Rideshare Insurance

Want to look at auto insurance quotes for the cheapest rideshare coverage? SmartFinancial can help—free of charge. When you enter your zip code or call 855-214-2291, SmartFinancial will compare real-time quotes from all the car insurance companies in your area and walk you through your options. It's easy, it's fast, and it's free.

Your Car Is a Huge Tax Deduction

As a Lyft or Uber driver, your car is a huge tax deduction. Since driving for Lyft or Uber is your livelihood, you can get a tax deduction for every dollar you spend—car payments, liability coverage, gas, oil changes, repairs, car washes, tires, wiper blades and so on.

Get receipts for everything! Write down your mileage before and after each shift (insurance companies take miles driven when calculating your premium). Document stops for gas, maintenance appointments and anything else that's pertinent. Many a Lyft or Uber pro keeps a notebook and an accordian file in their car to make things easier for the accountant.

What Is UberEATS?

UberEATS is a food delivery service from local restaurants. Customers choose their menu items and pay for them. UberEATS picks up the food and delivers it to the customer. Whether you live in California or New Hampshire, this gig is something to consider.

Should I Become an UberEATS Driver?

UberEATS drivers work whenever they want without a fixed schedule. You just log into the app whenever you want to work and then log out when you're done.

Can You Drive for Both Uber and Lyft?

Yes. In fact, both are a Transportation Network Company (TNC) without any exclusivity clauses for drivers. You can even drive for Uber and Lyft at the same time to maximize your earnings. You just need an iPhone or Android. Open the Uber and Lyft rider apps and go online with both, with Uber on the main screen while the Lyft one runs in the background (otherwise Uber will disconnect if you are away from the app for a few minutes. Do not use other apps while using these to prevent crashes and glitches.

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Commercial Auto Insurance: Part 1

In order to drive for UberBLACK, UberSUV or UberLUX, you need to have commercial auto insurance. You'll also need it if you are a food delivery worker. Commercial auto insurance can be pricey, on average between $900-$1200 annually, with an average cost of $750-$1200 per vehicle covered. For a driver with a clean driving record, there is typically up to $1m in liability with a $500 deductible for both comprehensive and collision coverage.

Transportation vehicles used primarily for business purposes need their own commercial auto policy even when the vehicle is not owned by the business. Commercial auto insurance offers coverage on a first and third party basis for personal damage liability, bodily injury liability, medical payments, uninsured motorist, comprehensive coverage underinsured motorist, collision coverage, and roadside assistance.

Commercial Auto Insurance: Part 2

Commercial auto insurance differs from personal auto insurance in the following ways:

  • Higher liability limits
  • Fewer limits on number of vehicles covered
  • More add-on coverage options

It is also important to note that UberX and similar service drivers may also need a commercial driver's license. Be sure to check in with your state's DMV regarding their driver's license type requirements for ridesharing. Some states only require a commercial driver's license if driving as a full-time occupation.

If your state requires a commercial driver's license while "driving-for-hire" you could be subject to prosecution if involved in an accident without a commercial driver's license regardless of commercial auto insurance policy coverage.

While most ridesharing companies only require that you have regular car insurance, there are situations in which a rideshare insurance policy is not sufficient. Speak with a licensed SmartFinancial agent to help you decide if you need to purchase a rideshare insurance policy or commercial auto insurance by entering your zip code below.

You Should Seriously Consider PIP Coverage

The more you drive, the greater the risk of getting involved in an accident. Lyft and Uber insurance don't cover your medical expenses when you are not on the clock. So for your own coverage, you should seriously consider personal injury protection (PIP). Unlike bodily injury liability insurance, which covers other drivers' medical expenses, PIP covers your medical expenses. For a few extra bucks a month, your personal auto insurance can include these PIP benefits:

  • Operations
  • Hospitalization
  • Ongoing professional care
  • Lost wages, if you're unable to work
  • Funeral expenses and accidental death benefits
  • Some home-care expenses, such as childcare or house cleaning, if you're unable to fulfill these duties yourself

PIP is not a substitute for underinsured motorist bodily insurance, but it will pay your claim faster than underinsured motorist bodily insurance. When the cost of a broken arm can cost $10,000 and a three-day hospital stay can cost $30,000, PIP insurance is an obvious choice for most people.

Personal Insurance Add-Ons

Everyone needs to get their state's mandated minimum liability insurance. But in the event of a catastrophic vehicle accident, the minimum coverage may leave you in financial ruin. For your personal auto policy, ask your licensed insurance agent about these other insurance products:

Comprehensive and collision coverage

  • Comprehensive and collision coverage
  • Uninsured/underinsured motorist, including underinsured motorist bodily injury coverage
  • Rental insurance coverage
  • GAP coverage

Comprehensive and collision coverage covers damage to your car (comprehensive and collision coverage together is called "full coverage"). One of the options for uninsured/underinsured motorist, underinsured motorist bodily injury coverage pays your medical bills when your in an accident with an at-fault driver with little or no insurance. Rental insurance will come in handy if you can't use your car for work. GAP coverage helps to pay off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value. 

All rideshare drivers should consider adding on these vehicle insurance products to their car insurance policy. When shopping for personal insurance, its best to investigate Liberty Mutual, USAA and all the other insurance companies to get as many auto insurance quotes as possible.

Over 50? Uber Has a Deal with AARP

Surprisingly, more than half of Uber and Lyft drivers are 51 years or older, even though most of us think of it as a service run by young people under the age of 30.

In fact, Uber started a partnership with AARP in 2015 to give every Uber driver 50 years and older a signing bonus of $35! The Life Reimagined incentive was designed to get more senior drivers to join the company. After all, they are safer drivers, statistically speaking. No matter what age you are or your personal auto insurance, driving for a rideshare company is a great way to make money. Here are some frequently asked questions about what it takes to work for Uber and Lyft.

Two Things To Keep in Mind

If you are involved in an accident and your insurer learns that you work for a rideshare company and that your app was on during the accident, you will not be paid out for the claim. Also, if you are not up front with your insurer, they can cancel your policy and refuse coverage in the future.

It's not advisable for Uber or Lyft drivers to rent a car—you'll be spending a large percentage of your earnings on the car rental. Joining Uber's or Lyft's Facebook page will help you make more money because they are full of great information about where to go.

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