Want To Be A Lyft or Uber Driver?
What You Need to Know About Rideshare Insurance
Why You Need It If You're Driving
by Bill Flitter
You just bought a new car, signed up for Lyft or Uber and now you’re ready to hit the road. Not so fast. It’s important that you protect your new vehicle, and yourself, with the proper Lyft or Uber insurance policy. Sure, pretty much everyone these days buys auto insurance, but if you’re a rideshare driver it’s a smart move to get extra protection with a Lyft or Uber insurance policy. While many rideshare drivers are under the impression that Lyft and Uber provide full insurance coverage, that’s not entirely accurate.
The Real Facts On Lyft and Uber Insurance
Uber and Lyft provide decent coverage once you’ve accepted a ride request, or when you have a rider in the car. However, their deductibles are very high. Uber’s is $1,000, and Lyft’s deductible is a whopping $2,500.
What’s worse than the high deductibles is that when you’re waiting for a ride request, their coverage is minimal. To top things off, when waiting for a request, you may not be covered by your personal auto insurance policy.
You're Standard Auto Insurance Will Not Cover You...
See, most auto insurance companies consider driving for Lyft or Uber a commercial activity, and pretty much all personal auto insurance policies specifically prohibit using the vehicle for commercial activities. In many cases, if your auto insurance company finds out you’re a rideshare driver, they may cancel your policy immediately. This was a big problem in the early days of ridesharing because there weren’t any insurance companies offering rideshare policies. Even a couple of years ago, after a couple of companies started offering drivers for Lyft and Uber insurance in certain states, it was often prohibitively expensive.
Thankfully, Today Lyft and Uber Insurance Is Available
Thankfully, that’s not the case today. In most places, multiple companies offer rideshare insurance, or auto policies with ridesharing endorsements. Even better, in most states, there is fierce competition between multiple insurance companies. This has caused the price of rideshare insurance to drop drastically over the past couple of years. It also means that if you’re a rideshare driver, it’s easier and cheaper than ever to get a proper rideshare insurance policy.
Below is an explanation of exactly what Lyft and Uber insurance cover, followed by the different types of rideshare insurance available to drivers today.
Know The Limitations Of Your Insurance Policy
Uber and Lyft divide ridesharing into three periods.
- Period 1: Vehicle is being used, and the rideshare app is online, and the driver is waiting for a ride request.
- Period 2: Vehicle is being used, the rideshare app is online, and a passenger has been accepted but has not yet been picked up.
- Period 3: Vehicle is being used, and the passenger(s) is either being transported or has arrived at the destination and is exiting the vehicle.
The Lyft and Uber insurance kicks in once a driver accepts a ride request (period 2), and while a rider is in the vehicle (period 3). However, if a driver is online in the Uber or Lyft app, but has not received a ride request (period 1), Uber and Lyft do not provide collision coverage, and provide very low contingent liability coverage.
So, if a driver has an accident while waiting for a ride request, neither Uber or Lyft will cover any of the repairs to your vehicle. Even worse, because Uber and Lyft’s liability coverage is contingent on the liability coverage in your personal auto policy, they will both ask you to file a claim with your insurance company.
This is where the big problem arises...
If you go to your insurance company and tell them the accident happened while ridesharing, they will not cover repairs to your vehicle either. That means you would be on the hook for repairing your vehicle. This could cost you thousands of dollars. Also, they will likely cancel your policy. You can avoid all this trouble if, when you purchase your new car for ridesharing through Carjojo using their rideshare driver discount, you also purchase a good rideshare insurance policy.
But Wait, There is Hope...
Luckily, rideshare policies are now available in 49 of the 50 states, from some of the largest and most trusted insurers in the nation, such as Allstate, Geico, State Farm, and many others. Even better, you can usually add rideshare coverage to a personal auto insurance policy for between $5-$20 per month, depending on the level of coverage you select.
How Does Rideshare Insurance Work?
There are two different types of rideshare coverage – gap coverage, and extended coverage.
Gap coverage, extends your personal auto policy through period 1. So, if you’re waiting for a ride request, you have the same auto coverage that you have when you’re driving to the grocery store. Once a ride request comes in, your personal auto insurance stops, and Uber or Lyft’s insurance takes over. This type of insurance fills the period 1 gap, giving you full liability and collision coverage during that time, and peace of mind.
Some companies, like Allstate, offer gap coverage that covers you in period 1, but also offer coverage that will cover part of the high Uber and Lyft deductibles if you should have an accident on the way to pick up a rider, or with a rider in the car.
The second type of rideshare insurance is extended coverage, which extends parts or all of a personal auto policy through periods 1, 2, and 3. Some extended coverage policies provide full coverage during all three periods, while others extend your personal collision coverage, but not the liability coverage. The benefit of many of these policies is that they offer lower deductibles than Lyft and Uber during periods 2 and 3. The trade off is that because extended coverage policies offer additional coverage, they generally cost more than gap coverage policies.
Over to You
To find out more about your rideshare insurance options, be sure to check out Rideshare Central’s 50 State Rideshare Insurance Database. You can check which companies offer rideshare insurance in your state, find a recommended agent, and get a quote today! So, if you’re already a rideshare driver, or you’re thinking of signing up for Lyft or Uber, be sure to purchase a rideshare insurance policy so you’re fully protected. You owe it to yourself and your new car.