What Is Rideshare Insurance Coverage?

Driving for Uber or Lyft is a great way to make money. But what kind of car insurance do you need while you drive? Learn more here.
Rideshare driver

Driving for a rideshare service such as Uber or Lyft is a great way to make some extra cash. It can allow you to make your own work schedule and have some independence. But your car insurance company won’t cover you if you drive your car for business use. If you drive for a ridesharing company, it’s important to know about rideshare insurance.

By law, rideshare companies must offer insurance options while you drive for them. This is typically basic liability insurance that covers bodily injury and property damage. It often doesn’t include full coverage options such as collision and comprehensive coverage.

Even with the insurance given by your ridesharing company, you could face being without insurance while you wait for your next passenger. This is because your regular auto insurance won’t cover you once you sign in to your ridesharing app. This includes when you don’t have a passenger. The moment you sign in, you’re now using your car commercially. Your rideshare company will only cover you while you drive to pick up passengers and while you have one in the car.

Many insurers offer rideshare coverage to fill the insurance gap between your personal auto insurance policy and the insurance you can get from your ridesharing company. This article will explain everything you need to know about rideshare coverage, including:

  • What rideshare insurance is
  • What it covers
  • Who might need it
  • Companies that offer rideshare coverage
  • How much rideshare insurance costs
  • Uber and Lyft’s insurance options
  • Frequently asked questions

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What is Rideshare Insurance?

Rideshare coverage is a form of car insurance that covers you if you drive for a ridesharing company. Many in the car insurance world refer to these as transportation network companies (TNC).

TNCs normally give you a limited amount of coverage. But this only covers you while you drive. It doesn’t protect you while you wait for passengers. Auto insurers offer rideshare insurance to fill the gap in coverage that occurs when you’re logged in to a TNC’s app but aren’t driving.

There are three coverage periods that you should know about if you’re a rideshare driver. Some companies like Uber and Lyft might have coverage during each period, but it can vary. Below is a breakdown of each period and the coverage it requires, per the Insurance Information Institute (III):

Period one – coverage gap, unless covered by rideshare insurance

This period starts once you log into your ridesharing app and haven’t yet matched with a potential passenger. This is the period where you’d have a gap in your insurance unless you’ve added rideshare coverage to your policy. Neither your standard insurance nor the coverage from your TNC would likely cover you.

Period two – covered by TNC’s insurance

In the second period, you’ve matched with and received payment from a passenger. This is the point when you drive to pick up a passenger, and they haven’t entered your car yet. Your ridesharing company’s insurance would give you coverage during this period.

Period three – covered by TNC’s insurance

In this period, you’ll have picked up a paying passenger and are on the way to their destination. Like period two, you should also have coverage from your TNC during this period.

Note that you’ll go back to period one once you’ve dropped off your passenger. Keep in mind that your regular car insurance will kick back in once you’ve logged out of the app.

Who Needs Rideshare Insurance?

Rideshare insurance is for people who drive for rideshare companies. You can use the coverage options that your TNC offers you. But you’ll meet an insurance gap for at least some time while you’re logged in to the driving service. You’d need to pay out of pocket for damages if you aren’t driving. Rideshare insurance exists to ensure that you have coverage for the entire time you drive for a TNC.

You should consider that you may risk losing your car insurance if you don’t tell your insurer that you drive for a ridesharing company. They’re likely to cancel or choose not to renew your policy if they somehow find out that you drove for Uber or Lyft without telling them first. Be sure to contact your insurance provider to let them know you plan on rideshare driving. They’ll also be able to help you get rideshare coverage if they offer it.

What Does Rideshare Insurance Cover?

Rideshare insurance typically covers much more than the insurance that your TNC offers. It can also extend into all three ridesharing periods, depending on the company. Below are some examples of rideshare coverages:

  • Bodily injury liability (BIL) coverage
  • Property damage liability (PDL) coverage
  • Collision and comprehensive coverage
  • Personal injury protection (PIP)
  • Uninsured (UM) and uninsured motorist (UIM)

Rideshare coverage may also include some other types of insurance such as MedPay or rental reimbursement coverage. This is most often the case if it’s already on your existing auto policy.

Which Companies Offer Rideshare Insurance?

Most major insurers offer rideshare coverage if you drive for Uber or Lyft. Be aware that some insurers may only offer rideshare insurance in select states. Some might not even offer it at all. Consider double-checking with your insurance company to see if it offers rideshare coverage.

Another choice is a commercial insurance policy. Some states may require this in place of rideshare coverage. Consider that this can be much more expensive than rideshare insurance.

Below is a list of some well-known insurers that offer rideshare coverage:

How Much Does Rideshare Insurance Cost?

Rideshare insurance is likely to increase your rates because it’s an add-on to your policy. The exact price you’ll pay for this coverage depends on your provider. Another company could even have a better deal than your current insurer. It may be a good idea to compare rates if you think you’re paying too much.

Remember that many things affect the cost of your premium. Your insurance prices typically go up or down based on factors such as:

  • Your driving record
  • Your credit score (except in Hawaii, California, and Massachusetts)
  • Your age
  • Your claim history
  • Your car’s make and model
  • Your car’s yearly mileage
  • Where you live

Uber and Lyft’s Insurance Options

Uber and Lyft both offer car insurance options while you drive for them. Both companies share the same benefits in terms of car insurance. The following is Uber and Lyft’s available coverage and limits:

While waiting for ride request (period one):

Bodily injury liability coverage:

  • $50,000 per person
  • $100,000 per incident

Property damage liability coverage:

  • $25,000 per accident

With passengers or en route to them (periods two and three):

  • $1,000,000 for third party liability coverage
  • Uninsured/underinsured motorist bodily injury liability coverage
  • Contingent comprehensive and collision coverage ($2,500 deductible)

Frequently Asked Questions

Q: Does driving for Uber or Lyft raise your insurance rates?

A: Your car insurance company won’t raise your rates just because you drive for a ridesharing company. But you could end up paying more if you add rideshare coverage to your policy or need to buy commercial auto insurance.

Q: Is rideshare insurance coverage required?

A: Rideshare insurance isn’t a required type of insurance. You’ll likely receive coverage from your rideshare company, but you could have gaps in coverage while you sit and wait to match with a customer. Rideshare coverage helps to fill those gaps, so you always have insurance while you’re out working.

A rideshare endorsement isn’t the only choice. You could get a commercial auto insurance policy. This can also give you coverage while you drive for a ridesharing company.

Q: Do I have to tell my insurance that I drive for Uber or Lyft?

A: You should contact your insurance company ASAP if you plan on driving for Uber or Lyft. Driving for a rideshare service could violate the terms of your policy. They could cancel your policy if they discover that you’re driving without telling them.  

Q: Do Uber and Lyft offer rideshare insurance?

A: Rideshare services such as Uber and Lyft don’t offer the same kind of “rideshare coverage” that insurance companies offer. Instead, they offer their own insurance options that include liability coverage, UM/UIM, and more.

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