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Rideshare insurance: A basic definition and who needs it

  • Auto Insurance
  • Xavier Sabastian
  • 5 minutes

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Most personal car insurance policies exclude rideshare insurance. It’s a rather common misperception that your personal auto insurance policy or employer’s business insurance covers rideshare insurance. You will need rideshare insurance if you pick up passengers and drive them to their destination for a fee.

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If you are a rideshare driver, you should consider purchasing this coverage as supplemental. At Way.com, we looked at how this insurance works. 

What is rideshare insurance?

Rideshare insurance is the car insurance that bridges the gap between your rideshare employer’s commercial car insurance policy and your car insurance. Individual insurance policies do not cover the transportation of paying clients from one location to another. Employer-provided policies frequently only cover the bare minimum and have time limits. For example, Lyft and Uber driver insurance only provide supplementary coverage for a limited time, so if you, your car, or other people are hurt outside of those time frames, you may face high out-of-pocket costs.

Rideshare drivers can obtain additional coverage. They can do so for further protection against accidents that cause damage or injury to themselves or others. Because rideshare drivers rely on their cars for a living, it’s only natural that they would consider purchasing more comprehensive coverage than the average commuter.

cost of Rideshare insurance

What is the cost of Rideshare insurance?

Because the cost varies by state and company, determining an average price for rideshare insurance is challenging. Furthermore, rate factors such as driving history, geographic area, claims history, the age of your car, and others influence your car insurance cost. It also depends on what kind of insurance coverage you have. A solo rideshare insurance coverage will almost certainly cost more than a rideshare add-on to your current policy. Consider getting an estimate from firms that provide ridesharing insurance in your area to determine your actual prices.

Uber and Lyft drivers need Rideshare coverage

Rideshare insurance can be a good option if your job entails driving paying customers from one location to another. Relying just on your personal and business auto insurance plans will leave you exposed to periods of non-coverage. Rideshare insurance will give you the extra protection you need to stay financially secure at all times. The commercial coverage of a ridesharing company usually only covers you and your car when picking up and dropping off customers. 

Commercial auto insurance is substantially more expensive than rideshare insurance.

coverage limits of Rideshare insurance

Coverage periods of Rideshare insurance

Offline: If you’re not logged in to your rideshare driver app or if you’re driving for personal reasons, you’re not protected by Uber or Lyft’s commercial car insurance. 

Period 1 – Waiting for a Request: If you’ve signed up for employment with your ridesharing company but have yet to be assigned a customer, you’re not covered by your employer. This causes a gap in your insurance coverage, putting you and your vehicle at risk financially if something goes wrong. Your insurance is also likely to be inactive at this period because you’re officially on the clock.

Period 2 – While Picking Up a Customer: Once you accept a customer and begin driving to pick them up, your business insurance kicks in. Even though you are insured during this time, ridesharing firms typically only provide limited liability coverage. Both Uber and Lyft driver insurance gives $50000 per person in bodily injury liability coverage, $100000 per bodily injury liability coverage incident, and $25000 in property damage coverage.

Period 3 – Ride in Progress: Your commercial auto policy covers you after you pick up the customer and for the duration of the ride, just like period two. You return to period one status after dropping off your customer. You are then unlikely to qualify for either your insurance or your employer-provided coverage.

How to buy Rideshare coverage?

Some car insurance companies have websites or online portals to prolong your insurance policy or add a new Transportation Network Company (TNC) policy. Others require you to phone and speak with a customer service representative. Make sure to tell your insurance that you operate as a rideshare driver when considering coverage alternatives. Based on your location, personal details, and driving history, they’ll provide you with a customized estimate. It’s a good idea to get car insurance quotes from a few different car insurance companies. Compare quotes to see which is the best deal for you.

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Points to remember: 

  • Basic auto insurance coverage does not include rideshare insurance.
  • Every state does not offer rideshare insurance. You’ll need to look into car insurance companies to see if this supplementary coverage is available where you live.
  • If you live in a state where ridesharing insurance is not available, consider obtaining business insurance.
  • The insurance provided by ridesharing companies does not cover them for the entire time they are in the car. 

Check out our blogs for info on finding top-rated airport parking, the best parking spots in your city, and affordable car washes near you.


 

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