Orlando Harmon
If you're a rideshare driver, you may be wondering if you can deduct your auto insurance on your tax return. The good news is that as a self-employed worker, you can deduct common driving expenses, including fees and tolls that rideshare companies like Uber and Lyft take out of your pay. In fact, your biggest tax deductions will likely be costs related to your car. You can also deduct other expenses like snacks for passengers, USB chargers/cables, or separate phones for driving. It's important to track these expenses as you go and keep receipts, as this will make it much easier when it comes time to file your taxes.
| Characteristics | Values |
|---|---|
| What is rideshare insurance? | A specific type of commercial auto insurance policy designed for people who drive for rideshare or food delivery services such as Uber, Lyft, DoorDash and Postmates. |
| Who needs rideshare insurance? | Rideshare drivers who want to bridge the gap between their personal car insurance and the coverage offered by rideshare companies. |
| What does rideshare insurance cover? | Rideshare insurance extends specific coverages on the personal policies of rideshare drivers so drivers are covered during the “app on” period. |
| How does rideshare insurance work? | Rideshare insurance functions as a form of commercial insurance. It fills in coverage gaps that are specific to the needs of those who work in the rideshare industry. |
| Is rideshare insurance required? | No, but you may need to purchase a commercial insurance policy if you use your car to earn an income (beyond driving to and from your place of work). |
| How much does rideshare insurance cost? | Companies like Geico, Progressive, USAA and Allstate all offer rideshare insurance for as low as $6 per month. |
What You'll Learn
What is rideshare insurance?
Rideshare insurance is a type of commercial auto insurance designed for people who drive for rideshare or food delivery services such as Uber, Lyft, DoorDash, and Postmates. It fills the coverage gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer.
Rideshare insurance is not typically included with standard auto insurance coverage. While most major car insurance carriers offer a rideshare endorsement that can be added to your personal car insurance policy, this may not be the case in all states.
Rideshare insurance is a good choice for a driver who wants to bridge the gap between their personal car insurance and the coverage offered by rideshare companies. It is important to note that rideshare insurance is not legally required in most states. However, it could save drivers a significant amount of money if they get into an accident while acting as a rideshare driver.
- May not be required by law
- Different from standard commercial coverage
- Fills a gap in standard coverage
- Addresses specific coverage needs of rideshare drivers
The cost of rideshare insurance varies, but it is typically under $30 per month and can be as low as $6 per month. It is significantly less expensive than commercial auto insurance because it is intended for people who use their personal vehicles for commercial purposes only part-time.
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Do I need rideshare insurance?
If you're a rideshare driver, you may need rideshare insurance to protect yourself and your vehicle. This type of insurance fills the gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer. It is especially important if you get into a car accident while driving for a rideshare company, as their coverage may be inadequate, leaving you to pay for steep car repair and medical bills out of pocket.
Rideshare insurance is not always legally required. However, it is a good idea to have it because your personal auto insurance policy typically excludes rideshare trips. This is because your insurer has priced your policy assuming you are only driving for personal use, not for earning money. As a result, your personal auto policy will not cover you while you are "at work".
Rideshare insurance is usually offered as an add-on to your existing personal auto policy. It is relatively inexpensive, with some companies offering it for as little as $6 per month.
You need rideshare insurance if you are using your car to earn an income. When the rideshare app is off, your personal auto insurance applies. When the app is on, you are generally covered by the insurance provided by the rideshare company. However, this insurance may not cover you during certain periods, such as when you are waiting for a ride request. This is where rideshare insurance comes in – it fills the gaps in coverage and ensures you are protected at all times.
Rideshare insurance typically includes the following:
- Comprehensive and collision coverage with the same deductible as your personal policy.
- Uninsured/underinsured motorist coverage, which generally has the same types and limits as your personal policy but only covers the driver.
- Additional coverages such as roadside assistance and rental car reimbursement, if you have them on your personal policy.
- Deductible reimbursement: some insurers will reimburse you for the difference between your policy's deductible and the rideshare company's deductible.
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What does rideshare insurance cover?
Rideshare insurance is a specific type of commercial auto insurance policy designed for people who drive for rideshare or food delivery services such as Uber, Lyft, DoorDash, and Postmates. It fills the coverage gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer. It is intended for drivers working with transportation network companies and is offered by most major auto insurers.
Rideshare insurance covers the "app on" period, which is when you are waiting for a ride request. During this time, rideshare companies may provide limited coverage, such as liability coverage, but it often comes with a high deductible and leaves many scenarios uncovered.
Rideshare insurance covers:
- Collision coverage: Pays for damages to your vehicle from an accident, regardless of fault.
- Comprehensive coverage: Covers non-collision damages to your vehicle, such as theft, vandalism, or weather-related damage.
- Uninsured/underinsured motorist coverage: Offers protection if you are involved in an accident with a driver who has insufficient or no insurance.
- Medical payments or personal injury protection: Covers medical expenses for you and your passengers, regardless of who is at fault.
The cost of rideshare insurance depends on several factors, including the driver's age, driving history, location, vehicle type, and how often they use the vehicle for ridesharing. It typically costs around $6 to $30 per month.
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How much does rideshare insurance cost?
The cost of rideshare insurance depends on the insurance company and the level of coverage you require. Some companies that offer rideshare insurance include Geico, Progressive, USAA, Allstate, State Farm, Farmers, and Erie.
Rideshare insurance is usually offered as an add-on to your existing insurance policy, and it is not typically available as a stand-alone policy. The cost of adding rideshare insurance to your personal policy could be as low as $6 per month, or even as little as $15 to $20 per year, but it can also cost over $25 per month. According to some insurer websites, you can expect to pay between $9 and $25 per month for this additional coverage.
The cost of rideshare insurance depends on the type of policy you choose. There are three main types of rideshare insurance policies: additional protection, personal insurance coverage extension, and hybrid insurance package. Additional protection policies fill the gaps in coverage provided by your rideshare company, while personal insurance coverage extensions expand your personal insurance policy to cover you while you are working. Hybrid insurance packages combine your personal and rideshare insurance policies into a single premium, covering you at all times, regardless of whether you are driving for business or pleasure.
When deciding between insurance providers and policy types, it is important to consider your specific needs and circumstances. For example, if you are a part-time rideshare driver, you may not need the same level of coverage as a full-time driver. Additionally, the cost of rideshare insurance may be influenced by factors such as your location, driving history, and the type of vehicle you drive.
It is worth noting that the cost of rideshare insurance is generally lower than the cost of commercial auto insurance. This is because rideshare insurance is intended for people who use their vehicles for commercial purposes only part-time.
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How do I get rideshare insurance?
If you are a rideshare driver, you will need to purchase rideshare insurance to fill the coverage gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer. This is because your personal auto insurance policy will not cover you if you are driving for commercial purposes.
Rideshare insurance is not available everywhere, and it is usually offered as a form of gap or supplemental coverage. You can get it from many of the largest auto insurers, including:
- State Farm
- Farmers
- Progressive
- Geico
- USAA
- Allstate
- American Family
- Liberty Mutual
The cost of adding rideshare coverage to your personal policy will depend on your insurance profile, but it is generally under $30 per month. Some companies offer it for as little as $6 per month.
To get rideshare insurance, contact your insurer and ask about coverage. You will likely need to add it to your existing policy.
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Frequently asked questions
Yes, you can deduct your auto insurance as a rideshare driver. As a self-employed worker, you can deduct common driving expenses, including fees and tolls that ridesharing companies like Uber and Lyft take out of your pay.
Your biggest tax deductions will be costs related to your car. You may also want to deduct other expenses like snacks for passengers, USB chargers/cables, or separate phones for driving. If you are a food courier, you might have different deductions, like food courier bags, backpacks, and blankets.
Make sure to track tax deductions as you go. Compile a list of these tax deductions (with receipts) and a mileage log so you’re prepared to file. Tracking business expenses can also help you determine whether your driving is profitable.
There are two categories of deductions that you can make: "operating expenses" and "vehicle expenses". Vehicle expenses are those related to driving your car, including mileage, parking and tolls. Operating expenses are all other expenses, including ridesharing company fees and commissions, snacks for passengers, and the cost of cell phone plans.
