If you transport people in your private vehicle, such as with Lyft or Uber, you need rideshare insurance. This extra layer of coverage to a driver’s personal auto insurance kicks in while driving for rideshare companies. Without adequate insurance coverage, drivers may find themselves in financial and legal trouble.
Rideshare Insurance
Thanks to the Internet, a whole new arena of public transportation arose when rideshare companies emerged. In 2009, Uber launched, followed three years later by Lyft. Both companies utilize apps that allow prospective passengers to hail a private vehicle. On the flip side, vetted drivers use a similar app to find passengers. As a result, rideshare has had a huge impact on the taxi industry, bringing in more competition through lower prices and wider availability.
While the rideshare companies do include insurance coverage for drivers when carrying customers, these policies do not cover everything. For instance, when waiting for their next rider or while on the way to pick up a passenger, drivers are not covered by the rideshare companies. Moreover, personal insurance companies consider accidents that happen during these times beyond their standard coverage, which means that drivers potentially will not be covered.
Insurance Coverage Gaps
Notably, auto insurance protects drivers in the event of an accident. When carrying a passenger, the rideshare’s insurance is active. Both Lyft and Uber include protection for up to $1 million, but that coverage only applies when the passenger is in the vehicle.
Thus, there are gaps in coverage that drivers need to understand. These gaps include when the app is active and while they are waiting for a ride request. Further, drivers may not be protected when they are en route to retrieve a passenger. Each type of gap leaves drivers exposed to potential financial and legal problems.
Rideshare Coverage
Rideshare drivers must seek out specific rideshare coverage, beginning with their current auto insurer. Most insurers offer said coverage, but some do not. For those that do, they will spell out what is covered with the rider (added coverage), including liability limits and deductibles. You may find, though, that the insurer is unwilling to cover you under their personal insurance policies, directing you instead to commercial auto insurance, which is more comprehensive and typically covers rideshare use.
Thus, the best approach to adjusting insurance coverage is to explore your options with an agent. This means offering a candid assessment of your work in rideshare to enable the agent to develop a plan that is right for you.
Notably, that plan must include sufficient liability coverage, collision and comprehensive protection, along with underinsured and uninsured motorist coverage. While you may already have these types of coverages, you may need to adjust the deductibles and limits. Your agent will guide you to safeguard that you are adequately insured.
Other Factors
Your insurance agent will discuss with you any other restrictions or regulations. For example, in some states you will find state-mandated requirements for rideshare insurance. Not only do these states require proof of rideshare insurance, but they may mandate minimum liability coverage.
Additional factors for rideshare insurance include the type of vehicle insured, your driving history, and the amount of coverage. We recommend drivers explore rideshare endorsement options to their personal insurance as well as commercial policies. An agent will help you determine the best rideshare insurance coverage for your personal financial and legal protection.
Do Not Leave Home Without It
Before you turn on the Lyft or Uber app, make sure that you are sufficiently covered in the event of an accident. You may also need added coverage even if you never carry passengers, such as with Door Dash, Postmates, Grubhub, and Instacart. A conversation with your insurance agent can go a long way to determining what you need and the best way to achieve adequate coverage.
See Also — SR-22 Coverage and Auto Insurance Explained
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