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Rideshare Insurance: Auto Insurance for a Rideshare Driver

According to studies, more than half the United States population uses ridesharing apps like Uber and Lyft. In addition, 8 in 10 rideshare drivers work for two or more services but only about 50% have rideshare insurance. A personal auto insurance policy, even if it has comprehensive and collision coverage, will not provide full coverage for a rideshare driver. Your personal property damage liability coverage and your personal injury protection (if it's required in your state) won't cover you either.

Is Rideshare Insurance Required for Uber Drivers?

Rideshare insurance is not required for a rideshare driver but is a wise coverage to add to a personal auto policy because there is a short stretch of time during which you are neither covered by your personal auto insurance policy nor your employer's third-party liability insurance on your behalf.

There are periods of time during which your personal auto insurance will not cover you and neither will the rideshare company’s insurance.

In short, there are periods of time during which your personal auto insurance will not cover you and neither will the rideshare company's insurance.

When Am I Not Covered by Third Party Liability Coverage as a Rideshare Driver?

When you have your rideshare app on but do not yet have a request for a ride, you are not covered by your personal auto insurance. The rideshare company's insurance may or may not cover you if you get into an accident at this time, but it's not guaranteed and policies vary from one company to another. 

Your personal auto insurance policy only covers you when your rideshare app is turned off. You’re also not covered while you’re waiting to accept a fare.

Your personal auto insurance policy only covers you when your rideshare app is turned off. You're also not covered while you're waiting to accept a fare. Rideshare insurance fills this gap when you're otherwise not covered.

Uber and Lyft Rideshare Drivers

Uber and Lyft are the two largest on-demand ride-hailing services, with lots of other smaller companies following in their shadows (Hailo, The Twist, Sidecar, BlackJet, Swifto). Many people are driving for these services as side jobs and some are even making it a full-time career. It's important for these drivers to thoroughly evaluate their insurance policies so they are covered in the event of an accident. The third-party insurance coverage offered by rideshare companies only covers rideshare drivers while once a passenger is in the car during a rideshare trip and until they arrive at their destination, but not while waiting for a ride request or waiting for the fare or en route to pick up the customer. Rideshare policies cover these gaps in protection because your car insurance policy will not.

It's important that you have the right insurance that will pay for a covered accident, and that includes property damage and bodily injury per person.

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Do Most Auto Insurance Companies Offer Rideshare Insurance Policies?

Many carriers, including Mercury Insurance, Liberty Mutual, and USAA, offer rideshare insurance which will cover you when your personal auto policy does not.

Surprisingly, more than half of Uber and Lyft drivers are 51 or over 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 drivers over the age of 50 a signing bonus of $35! The Life Reimagined incentive was to get more senior drivers to join the company. After all, they are safer drivers statistically speaking.

No matter what age you are, 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. 

1. Should I Become an Uber Driver or Lyft Driver?

If you're looking to supplement your income or if you're a student or senior who needs a part-time job, driving for Uber may not be a bad idea. If you enjoy being in a car all day, you'll love the work. However, unless you're working "peak hours" every day (very early and very late), it'll be hard to make a full 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. 

2. How Much Does an Uber or Lyft Driver Make?

This is a tricky question because every driver averages a different amount. With that said, do know that your actual earnings may not be as advertised. In 2015, Uber did their own study, which claimed that drivers make more than $19 an hour. A less biased study found, however, that depending on where you live, you actually make anywhere between $13-$20 an hour. If you want to make 50K, you have to provide about 60 rides a week for Uber and about 84 for Lyft. If you're driver less than 35 hours a week, you're making less. You should also consider the cost of driving, including gas, oil changes, repairs, car washes, insurance (you'll need Rideshare Insurance too, if you want to be fully insured) and other miscellaneous expenses. It's not advisable to rent a car to drive for Uber or drive for Lyft. You'll be spending a large percentage of your earnings on car rental. Joining Uber's Facebook page or Lyft's Facebook page will help you make more money because they are full of great information about where to go. With that said, if you live in a small town, there won't be much business at all except for festivals, big concerts and the usual bar crawlers.

3. What Are the Driver Requirements for Uber

All you need to drive for Uber is a clean driving record and a car that is less than 10 years old. The car must be a four-door car, truck or minivan with seatbelts for 4 passengers plus the driver. The car must pass inspection, and the driver must be on the insurance policy of that car. You always need to keep your car clean, inside and out. Count on regular car washes and possibly even some detailing. 

To pass an Uber background check you have to have: 

  • 1+ year(s) U.S. driver's license, if under 23 years old.

  • A valid driver's license

  • No more than 3 minor moving violations in the past 3 years 

  • No major moving violations within the last 7 years (DUI, reckless driving)

  • No criminal record 

Oh, and it goes without saying: You should like people and not be too skittish about strangers getting in your car!

To get the best but cheapest car insurance and rideshare insurance visit SmartFinancial Auto Insurance.

4. Do I Need Special Insurance to Drive for Uber or Lyft?

Technically you're covered by the company's commercial insurance policy while the customer is being driven and while the fare is being accepted. Your personal auto insurance covers you after the ride-share app is turned off. There is a gap in coverage between waiting for payment and turning off the app. If another car hits you while you're idling, it's an out-of-pocket expense because you're not covered by either insurance. That's where rideshare insurance comes in. It's not very expensive but it is an important form of protection if you're working as an Uber or Lyft driver. To get the best but cheapest car insurance with a rideshare endorsement visit SmartFinancial Auto Insurance.

5. Does Driving for Uber Increase Your Insurance?

Your standard auto policy is tailored to meet the needs of personal use. You must report it to your insurance company if you start driving for Lyft or Uber. While you will not need a commercial insurance policy, there are gaps in insurance, which an agent can help you fill for a minimal amount with an endorsement (rideshare insurance). 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 upfront with your insurer, they can and may cancel your policy and refuse coverage in the future.

6. Which Is Better? Driving for Lyft vs Uber

To maximize your earnings, it's wise to drive for both Lyft and Uber. Each has its own reputation within different circles. Also, rates vary so it's best to try out both to see where you're earning the most. Learn quickly what the peak hours are (Uber calls these "price surges"; Lyft calls them "prime time") because that's when you're making the most money.

These peak hours tend to be very late at night or early in the morning. Events that draw many rides include sports events, concerts, trade shows, conventions and the good old visit to the local bar.

One nifty feature that Lyft offers that Uber does not is the built-in tips on the app. Uber drivers can only take cash if the customer has cash readily available. Some states have put pressure on Uber to add a tipping option, however, so check to see what the options are in your state.

7. What Is UberEATS?

UberEATS is a food delivery service from local restaurants. Customers choose their menu items and pay for it. UberEATS picks up the food and delivers it to the customer. 

8. 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.

9. Can You Drive for both Uber and Lyft?

Yes, you may. 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.

10. Can You Drive for Uber with a DUI? How about Lyft?

Not if you've had the DUI within the past 7 years. If it is a DUI from. Say, 8 years ago or more, Uber and Lyft will not hire you.

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Personal Auto Insurance Coverages You Should Consider

Uninsured Underinsured Motorist Coverage

Underinsured motorist bodily injury is an important coverage to have, especially if you or passengers do not have health insurance. If the other driver is at-fault in the accident but has low insurance coverage limits, you may only have two options: to pay out of pocket or to sue the under-insured driver. This is why having uninsured/underinsured motorist bodily injury coverage is so important, especially if the other driver has no car insurance at all.

Comprehensive and Collision Coverage

What Does Comprehensive Insurance Cover?

Comprehensive auto insurance is not required. It is an optional coverage designed to protect you against damage that is not defined as a collision with another car or object. The following are some events in which your car will be covered if you have comprehensive car insurance:

  • Fire
  • Theft
  • Vandalism
  • Falling object
  • Hitting wildlife
  • Natural disasters

In some states, comprehensive car insurance covers glass replacement without a deductible payment. How wonderful (and rare) is that? Usually, there is a deductible you must pay in order for your coverage to begin. Deductibles range from $100 to $1,000. The lower your deductible, the higher your monthly premiums and vice versa. Let's say your deductible was $500 and the damage to your car will cost $2500 to fix. You'd pay the $500 and your car insurance company will pay $2000. 

Even though comprehensive insurance is different from collision insurance, often you must buy collision in order to buy comprehensive. Both are required by lienholders when you finance or lease a vehicle. The reason why lienholders require it is that the institution you borrowed from technically owns the car and wants to protect their asset while you're making payments on it. Even if you own your car and aren't required to have it, comprehensive auto insurance is an important coverage to consider.

Comprehensive insurance does not cover every type of loss. The following are instances comprehensive insurance does not cover:

  • Collision
  • Roadside assistance (towing)
  • Tire change
  • Gas, oil and water delivery
  • Battery services
  • Lockout services
  • Rental reimbursement
  • Personal property
  • Rollovers

What Does Collision Insurance Cover?

Just like comprehensive insurance, collision insurance is not required by law. Collision insurance is very important to have in case you are in an accident that is your fault. Collision coverage is what pays for repairs or the replacement of your car. It's your liability insurance that is required and that takes care of repairs or replacement of the other driver's car if you are at fault. It's important to make this distinction because all too often we think we need collision coverage so we are not responsible to pay out-of-pocket for damages to the other driver. Another mistake drivers sometimes make is they load on collision coverage with the highest limits when their car is worth less than what they pay in car insurance every year.

You may think that a collision always involves two cars, but in some cases, an accident is deemed a collision if the car hits an object, like a pole, guardrail or tree. Collision would cover these types of mishaps. Hit-and-run accidents are also covered by collision insurance. If you hit someone's mailbox, you'd be covered for that person's personal property and the damages to your car with the collision portion of your coverage. If you hit another moving vehicle and it was your fault, your liability insurance will cover the other driver's car and your collision insurance will cover the damages or loss of your car. If you hit a utility pole or random street wall, you may think it doesn't cost anything but the damage to your car. However, chances are that you will be billed by the city to repair or replace objects belonging to the public.

Should I Get Commercial Auto Insurance Instead of Rideshare Insurance?

Commercial auto insurance costs more than rideshare insurance, which is very inexpensive. Speak with an agent about your needs to find out exactly which type of coverage fits best for your circumstance. Start by entering your zip code on this page and answering some questions about yourself and your vehicle. The service is free, and you may save up to 40% a year on car insurance.

Commercial auto insurance costs more than rideshare insurance, which is very inexpensive.

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