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Car Insurance for Rideshare Drivers: What You Need to Know

By Abdul Ghofur Post a Comment

If you drive for a company like Uber or Lyft, you may enjoy the flexibility and income that comes with being a rideshare driver. But did you know that your personal car insurance may not cover you while you’re on the job? That’s why you need rideshare insurance - a special type of car insurance that protects you and your vehicle in case of an accident.

In this article, we’ll explain how rideshare insurance works, why you need it, how to get it, how much it costs, and how to save money on it. We’ll also answer some of the most common questions that rideshare drivers have about car insurance.

By the end of this article, you’ll have a better understanding of car insurance for rideshare drivers and how to find the best policy for your needs.

How Rideshare Insurance Works

Rideshare insurance is a special type of car insurance that covers you while you’re driving for a transportation network company (TNC) like Uber or Lyft. Depending on the policy, it may cover your liability and/or your vehicle damage in the event of an accident.

To understand how rideshare insurance works, you need to know the three phases of rideshare driving:

  • Phase 1: You have the app on and are waiting for a ride request.
  • Phase 2: You have accepted a ride request and are on your way to pick up the passenger.
  • Phase 3: You have picked up the passenger and are on your way to their destination.

When your app is off, your personal car insurance covers you. However, when your app is on, Uber and Lyft provide some coverage - but not enough.

Here’s how Uber and Lyft’s coverage works during each phase:

  • Phase 1: Uber and Lyft provide third-party liability coverage if your personal car insurance doesn’t apply. This covers the damages and injuries that you cause to others in an accident. The limits are $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $25,000 per accident for property damage. However, this coverage does not cover your own injuries or vehicle damage.
  • Phase 2: Uber and Lyft provide $1 million in liability coverage, which covers the damages and injuries that you cause to others in an accident. They also provide uninsured/underinsured motorist bodily injury coverage, which covers your injuries if you’re hit by a driver who doesn’t have enough or any insurance. Additionally, they provide contingent comprehensive and collision coverage, which covers your vehicle damage if you have these coverages on your personal policy. However, you have to pay a deductible of $1,000 for Uber and $2,500 for Lyft before this coverage applies.
  • Phase 3: Uber and Lyft provide the same coverage as in phase 2, except that the contingent comprehensive and collision coverage is not contingent on your personal policy. This means that even if you don’t have these coverages on your personal policy, Uber and Lyft will cover your vehicle damage, minus the deductible.

As you can see, Uber and Lyft’s coverage has some gaps and limitations. For example, it doesn’t cover you during phase 1 for your own injuries or vehicle damage. It also requires you to pay a high deductible for comprehensive and collision coverage during phase 2 and 3. Furthermore, it may not meet the minimum requirements of your state or lender.

That’s why you need rideshare insurance - to fill in the gaps and protect yourself from financial and legal risks.

Why You Need Rideshare Insurance

Rideshare insurance is not a luxury - it’s a necessity. If you drive for a TNC without rideshare insurance, you’re exposing yourself to several risks, such as:

  • Being dropped by your personal car insurance company. Most personal car insurance policies do not allow you to use your vehicle for commercial purposes, such as ridesharing. If your insurer finds out that you’re driving for a TNC without disclosing it, they may cancel your policy or deny your claim.
  • Being underinsured or uninsured in an accident. If you get into an accident while driving for a TNC, you may not have enough coverage from Uber or Lyft to pay for the damages and injuries. You may also not have any coverage at all if the accident happens during phase 1 or if you don’t have comprehensive and collision coverage on your personal policy. This means that you’ll have to pay out of pocket for the costs, which can be very expensive and stressful.
  • Facing lawsuits and damages. If you cause an accident while driving for a TNC, you may be liable for the damages and injuries that you cause to others. This means that you’ll have to pay for their medical bills, property damage, lost wages, pain and suffering, etc. The other party may also sue you for additional compensation, which could result in a judgment against you. A judgment can affect your credit score, your assets, and your income.

By having rideshare insurance, you can avoid these risks and drive with peace of mind. Rideshare insurance can cover you during every phase of a trip, regardless of whether Uber or Lyft’s coverage applies or not. It can also cover your own injuries and vehicle damage, without requiring a high deductible. It can also meet the requirements of your state or lender.

How to Get Rideshare Insurance

If you’re convinced that you need rideshare insurance, you may wonder how to get it. The good news is that there are several ways that rideshare drivers can get insurance:

  • TNC rideshare insurance: TNCs have to offer insurance, which covers you while you’re logged into the app. However, this insurance is not enough to protect you fully, as we explained above. You still need to have a personal car insurance policy that allows ridesharing or add a rideshare endorsement to it.
  • Rideshare endorsement: A rideshare endorsement is an add-on to your personal car insurance policy that extends your coverage to include ridesharing activities. It covers the gap between your personal policy and Uber or Lyft’s policy during phase 1. It may also cover the deductible for comprehensive and collision coverage during phase 2 and 3. A rideshare endorsement is usually cheaper than a private rideshare insurance policy but more expensive than a regular personal car insurance policy.
  • Private rideshare insurance: A few insurers offer standalone rideshare insurance policies that cover you during every phase of a trip. These policies replace your personal car insurance policy and provide full coverage for both personal and commercial use of your vehicle. They may also offer higher limits and lower deductibles than Uber or Lyft’s policy. A private rideshare insurance policy is usually more expensive than a rideshare endorsement but cheaper than a commercial car insurance policy.

To get rideshare insurance, you need to shop around and compare quotes from different providers. Not all insurers offer rideshare insurance, and the availability and cost may vary by state, company, coverage, etc.

Some of the major insurers that offer rideshare insurance are:

  • GEICO
  • Progressive
  • State Farm
  • USAA
  • Allstate
  • Farmers

To get rideshare insurance, you need to contact your insurer and ask them if they offer it in your state. You may also need to provide some information about your vehicle, your driving history, and your ridesharing activities. You may also need to adjust your personal car insurance policy to include ridesharing coverage.

How Much Rideshare Insurance Costs

The cost of rideshare insurance depends on several factors, such as:

  • Your state: Rideshare insurance is not available in every state, and the cost may vary by state depending on the regulations and the competition among insurers.
  • Your company: Different insurers may charge different rates for rideshare insurance, depending on their risk assessment and their discounts.
  • Your coverage: The amount and type of coverage you choose for your rideshare insurance will affect the cost. For example, higher limits and lower deductibles will increase the cost, while lower limits and higher deductibles will decrease the cost.
  • Your vehicle: The make, model, year, and value of your vehicle will affect the cost of rideshare insurance, especially for comprehensive and collision coverage. Generally, newer and more expensive vehicles will cost more to insure than older and cheaper vehicles.
  • Your driving history: Your driving record, including your accidents, violations, claims, and credit score, will affect the cost of rideshare insurance. Generally, drivers with a clean driving history will pay less than drivers with a poor driving history.

According to some estimates, the average cost of rideshare insurance is around $256 per month for drivers in Texas5. However, this may vary widely depending on the factors mentioned above. Some insurers may offer rideshare insurance for as low as $6 per month1, while others may charge more than $30 per month4.

The best way to find out how much rideshare insurance costs for you is to shop around and compare quotes from different providers. You can use online tools or contact agents or brokers to get personalized quotes based on your situation.

How to Save Money on Rideshare Insurance

Rideshare insurance can be a significant expense for rideshare drivers, but there are some ways to save money on it. Here are some tips on how to lower your rideshare insurance premium:

  • Compare quotes: As mentioned above, different insurers may charge different rates for rideshare insurance. By comparing quotes from multiple providers, you can find the best deal for your needs and budget.
  • Choose a higher deductible: A deductible is the amount of money you have to pay before your insurance kicks in. By choosing a higher deductible for your comprehensive and collision coverage, you can lower your premium. However, make sure you can afford to pay the deductible in case of a claim.
  • Take advantage of discounts: Many insurers offer discounts for various reasons, such as having a good driving record, bundling multiple policies, paying in full, enrolling in automatic payments, taking a defensive driving course, etc. Ask your insurer about the discounts they offer and see if you qualify for any of them.
  • Drive safely: One of the best ways to save money on rideshare insurance is to drive safely and avoid accidents and violations. This will improve your driving record and lower your risk profile, which will result in lower rates. It will also help you avoid paying deductibles and losing discounts.

Car Insurance FAQs

Here are some of the most frequently asked questions that rideshare drivers have about car insurance:

  • Q: Do I need commercial car insurance if I drive for a TNC?

  • A: No, you don’t need commercial car insurance if you drive for a TNC. Commercial car insurance is designed for businesses that use vehicles for commercial purposes, such as delivery trucks or taxis. Rideshare drivers are not considered commercial drivers because they use their personal vehicles for occasional trips. However, you do need rideshare insurance or a rideshare endorsement to cover the gap between your personal car insurance and Uber or Lyft’s policy.

  • Q: Can I use my personal car insurance if I drive for a TNC?

  • A: No, you can’t use your personal car insurance if you drive for a TNC. Most personal car insurance policies do not cover ridesharing activities because they are considered commercial use of your vehicle. If you use your personal car insurance for ridesharing, you may be violating your policy terms and risking cancellation or denial of claims.

  • Q: What happens if I get into an accident while driving for a TNC?

  • A: If you get into an accident while driving for a TNC, you should follow these steps:

    • Check yourself and others for injuries and call 911 if needed.
    • Exchange information with the other driver and any passengers, such as name, phone number, license plate number, driver’s license number, insurance company name and policy number, etc.
    • Take photos and videos of the accident scene, the damage to your vehicle and other vehicles involved, any injuries sustained by you or others, any skid marks or debris on the road, etc.
    • Report the accident to your TNC through the app or by calling their support line. They will provide you with instructions on how to file a claim and what coverage applies.
    • Report the accident to your personal car insurance company or agent if you have rideshare insurance or a rideshare endorsement. They will provide you with instructions on how to file a claim and what coverage applies.

  • Q: How do I choose the best rideshare insurance for me?

  • A: To choose the best rideshare insurance for you, you should consider the following factors:

    • Your state: Rideshare insurance is not available in every state, so you need to check if your state allows it and what are the requirements and regulations.
    • Your company: Different insurers may offer different types of rideshare insurance, such as TNC rideshare insurance, rideshare endorsement, or private rideshare insurance. You need to compare the pros and cons of each option and see which one suits your needs and budget.
    • Your coverage: The amount and type of coverage you choose for your rideshare insurance will affect the cost and the protection you get. You need to consider how much liability, uninsured/underinsured motorist, comprehensive, collision, medical payments, personal injury protection, roadside assistance, rental reimbursement, gap insurance, etc. coverage you need and want.
    • Your vehicle: The make, model, year, and value of your vehicle will affect the cost and the availability of rideshare insurance. You need to consider how much it would cost to repair or replace your vehicle in case of an accident or theft.

  • Q: How do I cancel my rideshare insurance if I stop driving for a TNC?

  • A: If you stop driving for a TNC and want to cancel your rideshare insurance, you should follow these steps:

    • Contact your insurer and inform them that you want to cancel your rideshare insurance. They may ask you for a written notice of cancellation with your name, address, policy number, date of cancellation, and reason for cancellation. You may also need to sign the notice and keep a copy for your records.
    • Get a confirmation of cancellation from your insurer, either by mail, email, or phone. The confirmation should include the date and time of cancellation, the amount of any refund or balance due, and any other relevant information. You should keep the confirmation for your records.
    • Cancel your automatic payments if you have set up any for your rideshare insurance premiums. You don’t want to pay for a policy that you no longer have or need. You should also check your bank statements and credit card statements to make sure that no payments are deducted after the cancellation date.

  • Q: How do I switch to a different rideshare insurance provider if I find a better deal?

  • A: If you find a better deal from a different rideshare insurance provider and want to switch to them, you should follow these steps:

    • Compare quotes from different providers and make sure that they offer the same or better coverage than your current provider. You should also check their ratings and reviews from third-party sources to ensure that they are reliable and reputable.
    • Apply for a new policy from the provider that you want to switch to. You may need to provide some information about your vehicle, your driving history, and your ridesharing activities. You may also need to adjust your personal car insurance policy to include ridesharing coverage from the new provider.
    • Wait for approval from the new provider. They may run a background check on you and verify your information before issuing you a policy. They may also send you an ID card and a declaration page that show your policy details.
    • Cancel your old policy from your current provider. You should follow the same steps as above for canceling your rideshare insurance. You should also make sure that there is no gap in coverage between the old policy and the new policy.

Conclusion

Driving for a TNC like Uber or Lyft can be a great way to earn extra income and enjoy flexibility. However, it also comes with some risks that require proper protection. That’s why you need rideshare insurance - a special type of car insurance that covers you while you’re driving for a TNC.

Rideshare insurance works by filling in the gaps between your personal car insurance and Uber or Lyft’s policy during each phase of a trip. It can cover your liability and/or your vehicle damage in case of an accident. It can also save you money by avoiding cancellation fees, deductibles, and lawsuits.

Rideshare insurance is a smart investment for any rideshare driver who wants to protect themselves and their vehicle while driving for a TNC. It can give you peace of mind and confidence on the road.

If you’re interested in getting rideshare insurance, you can start by comparing quotes from different providers online. You can also contact an agent or a broker who can help you find affordable and reliable rideshare insurance options.

Don’t wait until it’s too late - get rideshare insurance today and enjoy the benefits of driving for a TNC without the risks.

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