Jeffrey Wade
Can auto insurance deny a claim for Lyft?
Lyft drivers are required to have auto insurance that meets the minimum state coverage requirements. However, most personal auto policies will not cover you while driving for Lyft. Lyft offers liability, collision, and comprehensive insurance coverage for its drivers, but this coverage varies depending on the driver's status.
When a Lyft driver is waiting for a ride request, Lyft provides limited liability coverage, which may not be sufficient in the event of an accident. During this period, comprehensive and collision coverage is not offered by Lyft, leaving drivers potentially financially responsible for any damage to their vehicle.
Once a driver has been matched with a passenger and is en route to pick them up, Lyft's insurance coverage improves, offering higher liability limits and contingent comprehensive and collision coverage. However, this coverage comes with a high deductible, which means drivers may still face significant out-of-pocket expenses.
To ensure complete coverage, Lyft drivers should consider purchasing a separate rideshare insurance policy or adding a rideshare endorsement to their existing policy. This additional coverage can fill in the gaps left by both personal and Lyft insurance policies, providing financial protection in the event of an accident while driving for Lyft.
What You'll Learn
Lyft's insurance coverage during the ride request and passenger pick-up
Period 1: Ride Request
During the first period, the app is on, and the driver is waiting for a ride request. Lyft provides third-party liability insurance for covered accidents if the driver's personal insurance does not apply. The coverage 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, these limits are lower in Arizona and Nebraska, with third-party liability insurance of $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $20,000 per accident for property damage. In Maryland, Lyft maintains $125,000 for third-party liability insurance for bodily injury and property damage combined. It's important to note that Lyft does not procure any primary liability policy for rides in the five boroughs of New York City, and TLC drivers in this market must procure their own policy.
Period 2: En Route to Passenger
The second period begins when the driver has been matched with a passenger and is on their way to the pick-up location. During this period, Lyft maintains at least $1,000,000 for third-party auto liability coverage in most markets. However, these limits may be lower or not procured in some markets. First-party coverages may include uninsured motorist coverage, underinsured motorist coverage, personal injury protection (PIP), MedPay, and/or Occupational Accident coverage. If a driver has comprehensive and collision coverage on their personal auto policy, Lyft provides contingent comprehensive and collision coverage up to the actual cash value of the car, with a $2,500 deductible.
To ensure complete coverage while driving for Lyft, it is recommended to purchase a rideshare insurance policy or add a rideshare endorsement to your existing policy. This will help fill any coverage gaps and protect you financially in the event of an accident.
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Lyft's insurance coverage with a passenger in the car
Lyft insurance provides liability, collision, and comprehensive coverage to its drivers. However, the default insurance offered by Lyft is contingent and can leave gaps in your coverage, significantly increasing your financial risk. Lyft divides its insurance coverage into three distinct periods.
Period 1: The app is on, and you're waiting for a ride request
During this period, Lyft provides $50,000 of bodily injury per person, $100,000 of bodily injury coverage per accident, and $25,000 of property damage coverage per accident. Lyft's liability coverage will only cover you so much. Once the costs of the accident exceed these limits, you must pay out of pocket.
Period 2: You've been matched with a passenger, and you're on your way to the pick-up location
During Periods 2 and 3, Lyft offers $1 million of third-party liability coverage, uninsured/underinsured motorist bodily injury coverage, and contingent comprehensive and collision coverage that covers up to the cash value of your car. However, this contingent coverage also comes with a $2,500 deductible. The deductible means paying thousands of dollars out of pocket before Lyft's insurance covers any costs.
Period 3: The passenger is in the car
Period 3 begins when the passenger enters the car and ends when the passenger is dropped off. Lyft maintains the same insurance coverage during this period as in Period 2.
Lyft's insurance coverage varies during different periods of your trip. It's important to understand what insurance coverage will be in place if you get into an accident while driving for Lyft, what your insurer or Lyft will cover, and what you may be financially responsible for in these situations.
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Lyft's insurance coverage when the app is off
Lyft's insurance coverage is divided into three distinct periods, and it's important to understand the differences between them. When the app is off, your personal auto insurance coverage applies. This means that any accidents or incidents that occur while you are not using the Lyft app will be covered by your own insurance policy.
Most personal auto policies will not cover you while you are driving for Lyft. Therefore, it is essential to review your personal insurance policy and understand its limitations. If you want complete coverage whenever you drive, you may need to purchase additional insurance, such as a rideshare insurance policy or a rideshare endorsement.
Rideshare driving is considered a commercial activity, and your personal auto insurance only covers your vehicle's personal use. Unless you have a commercial policy or add an endorsement for ridesharing to your existing policy, your personal insurance will not cover you while driving for Lyft.
In summary, when the Lyft app is off, your personal auto insurance is your primary coverage, and it is important to ensure it meets the minimum state coverage requirements.
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Lyft's insurance coverage and personal auto insurance
Firstly, let's discuss Lyft's insurance coverage. Lyft provides liability, collision, and comprehensive insurance for its drivers. However, the coverage varies depending on the stage of the rideshare process. There are typically three distinct periods: Period 1, when the app is on, and the driver is waiting for a ride request; Period 2, when the driver has been matched with a passenger and is en route to the pick-up location; and Period 3, when the passenger is in the car until they are dropped off. During Period 1, Lyft offers lower coverage limits, including $50,000 per person for bodily injury, up to $100,000 per incident, and $25,000 for property damage. In Periods 2 and 3, Lyft provides higher liability limits and contingent comprehensive and collision coverage, covering up to the cash value of the car. However, this coverage comes with a substantial $2,500 deductible.
Now, let's talk about personal auto insurance. When the Lyft app is turned off, your personal auto insurance coverage applies. However, it's important to note that most personal auto policies do not cover you while driving for Lyft or other ridesharing services. Personal auto insurance policies are typically intended for personal use, and commercial activities that earn you money are excluded. Therefore, it is recommended to purchase additional coverage, such as a commercial policy or a rideshare endorsement, to ensure adequate protection while driving for Lyft. A rideshare endorsement is a more cost-effective option, as a commercial policy can be significantly more expensive.
To ensure complete coverage, it is advisable to combine Lyft's insurance with a rideshare insurance policy or endorsement. This will help fill any gaps in coverage and provide financial protection in case of accidents or incidents during any stage of the rideshare process. By understanding the limitations of both Lyft's insurance and personal auto insurance, drivers can make informed decisions about their coverage needs and choose the right policies to stay protected.
Additionally, it is worth noting that Lyft maintains commercial insurance on behalf of drivers, as required by state and local laws. This insurance provides coverage while using the Lyft app, but it does not replace the need for personal insurance. In the event of an accident, Lyft's insurance acts as the primary coverage, and if a driver carries commercial insurance or personal coverage specific to ridesharing, Lyft's policy will be secondary.
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Lyft's insurance and rideshare insurance
Lyft's insurance coverage for its drivers is divided into three distinct periods, depending on the driver's activity while using the app.
Firstly, when the app is off, a driver's personal auto insurance coverage applies. If a driver has rented a car through Express Drive, the standard insurance included applies.
Secondly, when the app is on, and a driver is able to receive ride requests, Lyft maintains third-party liability insurance for covered accidents if a driver's personal insurance does not apply. This includes at least $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $25,000 per accident for property damage. There are exceptions in Arizona, Nebraska, and New York City, where Lyft does not procure any primary liability policy, and drivers must procure their own policy.
Thirdly, when the app is on, and a driver is en route to pick up passengers, or during a ride, Lyft maintains at least $1,000,000 for third-party auto liability coverage in most markets. This includes first-party coverages, such as uninsured motorist coverage, underinsured motorist coverage, personal injury protection (PIP), medical payments (MedPay), and/or Occupational Accident coverage. If a driver obtains comprehensive and collision coverage on their personal auto policy, Lyft maintains contingent comprehensive and collision coverage up to the actual cash value of the car, with a $2,500 deductible.
Rideshare insurance is a separate policy or endorsement that drivers can purchase to ensure they have complete coverage whenever they drive. This is because most personal auto policies will not cover drivers when they are working for a rideshare company.
Rideshare insurance helps to bridge the gap in coverage when a driver has the app on but has not accepted a ride request. During this period, Lyft provides less coverage than when a driver is en route to pick up a passenger or has a passenger in the car.
Several insurance companies now offer rideshare coverage, and it is important for drivers to review their personal coverage and the coverage provided by Lyft to ensure they are not at risk.
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Frequently asked questions
If you don't inform your auto insurance company that you drive for Lyft, your personal auto policy will be invalidated. This would leave you responsible for any damages in case of an accident.
If you get into an accident while driving for Lyft, you must first report the accident to Lyft. A claim will be set up with Lyft's insurance company. Once a claim is set up, you will get a claim number. From that point forward, all your contact will be through Lyft's insurance company.
If you get into an accident while waiting for a ride request on the Lyft app, Lyft provides liability coverage with lower limits. Lyft's liability coverage has limits of $50,000 per person for bodily injury, up to $100,000 per incident, and $25,000 for property damage coverage.
