Rideshare Insurance: Auto Insurance for a Rideshare Driver

Rideshare insurance covers gaps when you’re not protected by the commercial insurance of a rideshare company. Your personal auto insurance is not meant for business/commercial use. So, if you are a driveshare worker and you don’t tell your provider, and they find out, they could cancel or refuse to renew your insurance policy. Not all states or providers offer rideshare insurance. Instead, you would need to purchase a commercial auto insurance policy. Depending on your insurance provider, rideshare insurance can provide bodily injury and property damage liability coverage, medical expense coverage, personal injury protection, comprehensive coverage, collision coverage, uninsured/underinsured coverage and roadside assistance. You can get rideshare insurance either through a separate policy or through a rideshare endorsement which is cheaper.

For those who are rideshare drivers or are considering entering the business, keep reading to learn about how best to financially protect yourself.

What Is Rideshare Insurance?

Rideshare insurance provides coverage when the insurance through your rideshare company doesn’t apply or is inadequate. Rideshare companies like Lyft and Uber provide minimal insurance for their drivers that varies based on the task being performed.

Rideshare companies categorize your work into periods with different coverage during each period.

Period 1:  The app is turned on and the driver is waiting for the company to assign a passenger (also referred to as a “fare”)

Period 2:  The driver has accepted a fare and is on the way to pick up their passenger.

Period 3: The passenger is in the vehicle

Currently rideshare companies only provide full coverage during periods 2 and 3. During period 1, companies offer minimal liability insurance and no collision, comprehensive, or uninsured/underinsured coverage. This means if you are at fault for an accident during period 1, you have no insurance to repair your own car and may even be liable for damage to someone else’s property or vehicle beyond the limits of the company policy. Because the app is turned on during this period, your regular personal insurance will not apply either, leaving what is referred to as a gap in your coverage.

Your personal auto insurance is not meant for business/commercial use.

Although drivers are not required by law to purchase additional rideshare coverage for this gap, it is often advisable. Below is a table showing the differences between rideshare insurance and commercial insurance from a rideshare company like Lyft and Uber:

 

Rideshare insurance

Commercial insurance

Definition

Bodily damage liability

Yes

Yes

Helps cover medical costs for others who are injured in a car accident that you are responsible for

Property damage liability

Yes

Yes

Helps cover the costs of repairs or replacement of property belonging to others resulting from a car accident you are responsible for

Collision*

Yes

Only during Periods 2 and 3

Helps pay damages to your own vehicle caused by an accident regardless of who is at fault

Comprehensive

Yes

Only during periods 2 and 3

Helps pay to repair or replace your vehicle if it is damaged by something other than a car accident. Covered perils include:

  • fires
  • falling objects
  • explosions
  • earthquakes
  • windstorms
  • hail
  • floods
  • vandalism
  • riots
  • collision with animals

Medical expense

Yes

No

Helps pay for the costs associated with medical bills or funeral costs for you or your passengers if there is an injury or death due to an accident regardless of who is at fault

Personal injury protection

Yes

No

Helps provide financial support towards costs you or your passengers incur due to a covered accident. Costs include childcare, grocery delivery fees, lost income or medical expenses. States that require this coverage are:

  • Delaware
  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Oregon
  • Pennsylvania
  • Texas
  • Utah

Uninsured

Yes

Only during periods 2 and 3

Protects you and your vehicle from financial losses if there is a car accident caused by someone who doesn’t have auto insurance

Underinsured

Yes

Only during periods 2 and 3

Protects you and your vehicle from financial losses if there is a car accident caused by someone who doesn’t have sufficient insurance to cover your losses

Roadside assistance

Yes

No

Provides coverage for the cost of:

  • Mechanical labor
  • Towing to the nearest mechanic
  • Delivery of gas, oil, battery or change of tire (Emergency road service won’t necessarily cover the cost of the item itself)
  • Locksmith, if the keys are lost, locked inside the vehicle or stolen

*Lyft and Uber provide collision and comprehensive coverage contingent upon if you have them on your personal auto policy. Both companies will pay up to the cash value of the vehicle.

Rideshare insurance provides coverage when the insurance through your rideshare company doesn’t apply or is inadequate.

How Does Rideshare Insurance Work?

Rideshare insurance works like regular insurance except it covers you and your vehicle when you are working as a driver for companies like Uber or Lyft. It comes into play anytime you are logged on to your rideshare app and is designed to fill in the gaps of the insurance provided by your rideshare company. Below is a breakdown of how your coverage switches while using platforms like Lyft and Uber:

When You're Offline

The coverage provided by Lyft and Uber doesn’t apply when you’re offline, but your personal auto insurance policy would.

When You're Online and Waiting for a Ride Request

Your rideshare insurance becomes active once you’ve turned on your rideshare app and you’re waiting for a customer.

When You Accept a Request

The insurance provided by the rideshare company will become active once you accept a fare (job assignment). This coverage continues while you are en route to pick up your passenger, while you are driving them to their destination, and right up until the time they have exited your vehicle.

When the Customer Has Left

Your rideshare insurance is again active once the customer has exited your vehicle and waiting for your next passenger to be assigned.

Get Free Quotes from Best Rideshare Insurance Companies

Why do App-Based Drivers Need Insurance?

App-based drivers need insurance because their personal auto policy will not provide coverage while the rideshare app is on. Also, the insurance provided by the rideshare company will most likely not offer full protection during certain time periods, such as waiting to be assigned a passenger. And while ridesharing companies do offer auto insurance for their drivers, this coverage is usually minimal, offering the lowest limits and is missing important coverage, such as roadside assistance, med pay and possibly collision and comprehensive. If app-based drivers fail to notify their insurance company that they are using their personal vehicle for business purposes, the insurance provider may cancel their policy or refuse to renew.

Your rideshare insurance becomes active once you’ve turned on your rideshare app and you’re waiting for a customer.

What Does Rideshare Insurance Cover?

Rideshare insurance covers you once your rideshare app is activated. The type of coverage offered by your rideshare policy depends on the carrier and where you live. Rideshare insurance can include:

  • Bodily injury liability
  • Property damage liability
  • Collision and comprehensive
  • Medical expense
  • Personal injury protection
  • Uninsured motorist bodily injury
  • Underinsured motorist bodily injury
  • Roadside Assistance

If you don’t have rideshare insurance coverage in place and you still use your vehicle to make money through rideshare companies like Lyft or Uber, your insurer will most likely not cover you if you get into an accident while working. And if your provider is notified that your vehicle is being used without the proper insurance, they may drop your coverage altogether.

Do Lyft and Uber Have Insurance?

Lyft and Uber provide insurance for their drivers. Below is a look at what each company offers.

Company

Lyft

Uber

App is off

Your personal auto insurance coverage applies.

Your personal auto insurance coverage applies

App is on waiting for a ride request

Provides third-party liability insurance if your personal auto insurance doesn’t apply

  • $50,000/person for bodily injury per person
  • $100,000/accident for bodily injury per accident
  • $25,000/accident for property damage per accident

Provides third-party liability insurance if your personal auto insurance doesn’t apply

  • $50,000/person for bodily injury per person
  • $100,000/accident for bodily injury per accident
  • $25,000/accident for property damage per accident

App is on while picking up passengers and transporting them

Lyft provides the following insurance for covered accidents:

  • $1,000,000 for third-party auto liability
  • Uninsured/underinsured motorist bodily injury
  • Contingent comprehensive and collision 
    • Up to the actual cash value of the car ($2,500 deductible)

Uber provides the following insurance for covered accidents:

  • $1,000,000 third-party auto liability
  • Uninsured/underinsured motorist bodily injury
  • Contingent comprehensive and collision
    • Up to actual cash value of the car ($2,500 deductible)

How Much Does Rideshare Insurance Cost?

Rideshare coverage can be as low as $6 a month and as high as $25 a month depending on your provider. Rideshare coverage can be bought either through a separate policy or through a rideshare endorsement or rider, which usually costs less.

Similar to most insurance coverages, the higher your limits, the more your insurance will cost. In the case of a rideshare endorsement, the limit is usually the same as the one for your personal auto insurance policy. For instance, your rideshare endorsement can only pay $100,000 for a covered claim if your personal auto policy has a limit of $100,000. A separate rideshare policy can have a separate limit.

Are There Gaps Between Rideshare and Personal Auto Policies?

There are no gaps if you have a rideshare policy or endorsement and a personal auto policy. Rideshare is for work, and a personal policy is for everyday driving. When your app is on and you’re waiting for a customer or driving a customer, your rideshare coverage applies. Otherwise, you’re using your personal auto coverage.

Also, the rideshare company’s policy only offers minimum liability coverage and uninsured/underinsured coverage. Rideshare insurance will provide additional coverage, such as collision, comprehensive, medical expenses and personal injury protection when available at the coverage limit you choose.

Do I Have to Tell My Insurance Company That I’m a Rideshare Driver?

You should tell your insurance company that you’re a rideshare driver. Rideshare driving can open you up to liabilities that your personal car insurance plan might not cover. Because of this, your insurer could cancel or refuse to renew your policy should they find out you're a rideshare driver and didn’t tell them. Contact your auto insurance provider before you start working for a rideshare company so you can add rideshare coverage to your plan and make sure you're not violating the terms of your policy.

Rideshare Insurance FAQs

What happens if I get into an accident as a rideshare driver?

If you get into an accident while your app is on as a rideshare driver, contact the rideshare company’s claims department to get help with next steps.

Can I use rideshare insurance as my personal car insurance?

You cannot use rideshare insurance as your personal car insurance because it only applies when your rideshare app is active and you’re waiting for a customer or transporting a customer. Driving your car without insurance is illegal in most states, so make sure you have a personal auto policy with your state’s minimum requirements.

Should I get commercial auto instead of rideshare insurance?

Not every state or insurance company has rideshare insurance as an option for customers, so you may have to get commercial auto insurance if you’re a rideshare driver.

Key Takeaways

  1. Rideshare insurance refers to a kind of auto coverage for rideshare drivers that gives a greater range of coverage with higher limits than the commercial car insurance policies provided by rideshare companies.
  2. Rideshare insurance is applied any time you have your rideshare app on and you’re waiting for a customer, driving to pick up a customer or driving a customer to their destination. Otherwise, your personal coverage would be in effect.
  3. Rideshare insurance offers you additional coverage with higher limits while your rideshare app is on and you’re either waiting to pick up customers or you’re transporting customers.
  4. You should notify your insurance company if you’re driving for a rideshare company. If you don’t, and your insurance provider finds out, they could cancel or refuse to renew your coverage.

If you’re a rideshare driver, make sure you’re covered with the right insurance. Enter your zip code below or call 855.214.2291 to receive your free auto insurance quotes in minutes.

Get a Free Auto Insurance Quote Online Now.