Paul Sanchez
If you're considering becoming a Lyft driver, it's important to understand how it will impact your insurance. Driving for Lyft is considered a business use of your vehicle, and most personal auto insurance policies do not cover business use, leaving a coverage gap. This means that, as a Lyft driver, you will likely need to purchase additional insurance to ensure you're adequately protected in the event of an accident. Lyft does provide some insurance coverage for its drivers, but it may not be sufficient on its own, and you may still be financially responsible for repairs and medical expenses. To fill this gap, you can purchase a commercial policy or add a rideshare endorsement to your existing policy, although this will increase your premium.
| Characteristics | Values |
|---|---|
| Lyft's insurance coverage | Lyft offers liability insurance and contingent comprehensive and collision coverage |
| Gaps in Lyft's insurance coverage | Lyft's insurance coverage may not be enough and may leave coverage gaps that increase your financial risk |
| Lyft's insurance in certain locations | Lyft does not procure insurance for rides with TLC, livery, and TCP drivers countrywide |
| Lyft's insurance in Maryland | Third-party liability insurance is $125,000 (combined single limit for bodily injury and property damage) |
| Lyft's two-tiered insurance coverage scheme | Lyft provides some insurance protection for drivers who are working, but drivers must also buy a special kind of insurance called a "rideshare endorsement" |
| Lyft's insurance during the three distinct periods | Lyft's insurance coverage depends on whether the driver rented a car through Express Drive or whether their personal insurance does not apply |
| Lyft driver's personal auto insurance | A personal auto insurance policy does not cover driving for Lyft and is considered a policy violation |
| Lyft driver's insurance options | Lyft drivers can either purchase a commercial policy or add a rideshare endorsement to their policy |
| Lyft driver's insurance cost | Lyft drivers pay higher rates for coverage because they are riskier to insure due to increased chances of an accident or claim |
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What You'll Learn
Lyft insurance coverage
Lyft offers insurance coverage for its drivers, but it is limited and may not be enough to cover all eventualities. It is important for Lyft drivers to understand the insurance coverage they need and what is covered by Lyft.
Lyft drivers are required to have auto insurance that meets the minimum state coverage requirements. However, most personal auto policies will not cover drivers when they are driving with Lyft. Therefore, Lyft drivers may need to purchase additional insurance coverage. This can be done by buying a rideshare insurance policy or adding a rideshare endorsement to their existing policy. A rideshare endorsement is significantly cheaper than a commercial policy, which could cost thousands more per year.
Lyft maintains third-party liability insurance for covered accidents if the driver's personal insurance does not apply. The amount of coverage provided by Lyft varies depending on the state and the specific circumstances of the accident. For example, in Arizona and Nebraska, third-party liability insurance is $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $20,000 per accident for property damage. In Maryland, third-party liability insurance is $125,000 (combined single limits for bodily injury and property damage) when the driver is en route to pick up a passenger. In most markets, Lyft provides at least $1,000,000 for third-party auto liability coverage, but this may be lower or not procured in certain markets.
Lyft also maintains first-party coverages, which may include uninsured motorist coverage, underinsured motorist coverage, personal injury protection (PIP), medical payments (MedPay), and/or Occupational Accident coverage. MedPay covers healthcare or medical expenses if a driver is injured in a covered accident, while PIP covers healthcare, medical expenses, and/or wage loss in the same scenario. Occupational Accident coverage applies only in select states for medical expenses and disability benefits when a driver is injured in a covered accident. These states include California (for accidents on or after December 16, 2020), Massachusetts (on or after October 1, 2024), and Minnesota (on or after January 1, 2025).
It is worth noting that Lyft does not procure insurance for rides with Taxi and Limousine Commission (TLC) drivers in certain areas, including the five boroughs of New York City and specific New York counties (Westchester, Nassau, Suffolk, Dutchess, Ulster, and Rockland). In these cases, TLC drivers must procure their own policies consistent with state and local requirements.
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Lyft insurance requirements
Lyft insurance coverage is a complex topic, and it's important to understand the requirements and options available to drivers. Here is a detailed overview of the insurance requirements for Lyft drivers:
Lyft's Insurance Coverage:
Lyft provides insurance coverage for its drivers, but it is important to note that this coverage has limitations and may not be sufficient on its own. Lyft maintains at least $1,000,000 in third-party auto liability coverage for covered accidents. This coverage includes first-party coverages such as uninsured motorist coverage, underinsured motorist coverage, Personal Injury Protection (PIP), Medical Payments (MedPay), and Occupational Accident coverage. This insurance applies from the time a driver accepts a ride request until the ride is completed.
Personal Auto Insurance:
Lyft drivers are required to have their own personal auto insurance that meets the minimum state coverage requirements. However, it's important to note that most personal auto insurance policies do not cover ridesharing activities. As a result, drivers may need to purchase additional coverage or risk having their claims denied or policies cancelled.
Ridesharing Endorsement:
To fill the coverage gaps, Lyft drivers can purchase a ridesharing endorsement, also known as a rideshare insurance policy. This endorsement extends the driver's personal car insurance policy while they are working but have not yet accepted a ride request. It is important to note that a ridesharing endorsement typically only provides liability coverage, so drivers may still have coverage gaps for collision and comprehensive insurance.
Commercial Policy:
Another option for Lyft drivers is to obtain a commercial policy. While this option can be significantly more expensive, it provides comprehensive coverage for ridesharing activities. Drivers who opt for a commercial policy must inform their personal insurance company that they are offering ridesharing services.
State and Local Requirements:
It is crucial for Lyft drivers to be aware of any state and local regulations that may impact their insurance requirements. For example, in New York City and certain New York counties, Taxi and Limousine Commission (TLC) drivers, and livery and/or Transportation Charter Permit (TCP) drivers are subject to state and local requirements and must procure their own insurance policies. Similarly, some states, like Maryland, have specific minimum requirements for third-party liability insurance coverage.
In summary, while Lyft provides some insurance coverage for its drivers, it is important for drivers to understand the limitations and supplement it with additional insurance options, such as a ridesharing endorsement or a commercial policy, to ensure they have adequate coverage while driving for Lyft.
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Lyft insurance options
Lyft drivers are required to have auto insurance that meets the minimum state coverage requirements. However, most personal auto policies do not cover you while driving for Lyft. This is because driving for Lyft is considered a business use of your vehicle, and personal auto policies typically exclude coverage for business purposes. As a result, Lyft drivers may need to purchase additional insurance to ensure they have adequate coverage.
Lyft offers its drivers liability insurance and contingent comprehensive and collision coverage. However, these policies may not provide full coverage, leaving gaps that increase financial risk. For example, Lyft's insurance will only apply after you have made a claim against your own auto insurance, and it may not cover property damage in the event of an at-fault accident while en route to pick up a passenger.
To ensure complete coverage, Lyft drivers have a few options:
- Purchase a rideshare endorsement: This is an additional policy feature that can be added to your existing personal auto insurance policy. A rideshare endorsement will increase your premium, but it is significantly cheaper than a commercial policy.
- Obtain a commercial policy: This option is more expensive than a rideshare endorsement, potentially costing thousands of dollars more per year.
- Buy a separate policy from a company that offers rideshare insurance: Some insurance companies offer specialised rideshare insurance policies that are designed to fit the rideshare business model. These policies can provide coverage for gaps left by personal or commercial policies.
It is important to note that insurance requirements and options may vary depending on your location and individual circumstances. It is always a good idea to review your insurance policy and consult with an insurance expert to ensure you have the appropriate coverage for your specific situation.
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Lyft insurance costs
Lyft offers insurance for its drivers, but it is not comprehensive. Lyft's insurance does not cover drivers when they are waiting for a ride request, only when they are driving to pick up a passenger or are on a trip with a passenger. Lyft maintains at least $1,000,000 for third-party auto liability coverage for covered accidents, and first-party coverages, which may include uninsured motorist coverage, underinsured motorist coverage, personal injury protection (PIP), medical payments (MedPay), and/or occupational accident coverage.
In certain markets, Lyft's third-party liability coverage limits are lower, and in some cases, Lyft does not provide insurance at all. For example, in Arizona and Nebraska, third-party liability insurance is $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $20,000 per accident for property damage. In Maryland, third-party liability insurance is $125,000 (combined single limit for bodily injury and property damage) while the driver is en route to pick up a passenger. In New York City's five boroughs and certain New York counties (Westchester, Nassau, Suffolk, Dutchess, Ulster, and Rockland), as well as for livery and/or Transportation Charter Permit (TCP) drivers countrywide, Lyft does not provide insurance, and drivers must procure their own policies that meet state and local requirements.
Due to these gaps in coverage, Lyft drivers may want to consider purchasing additional insurance. Rideshare insurance fills the gaps between a driver's personal car insurance and Lyft's insurance, providing greater financial protection. The average rideshare insurance premium is $270 per month, or $3,240 per year, which is higher than the average premium for non-rideshare drivers. However, a rideshare endorsement, which can be added to a driver's personal car insurance policy, is significantly cheaper than a commercial policy. This endorsement typically costs $270 per month and can provide benefits like roadside assistance and reimbursement for the difference between a driver's regular deductible and the rideshare company's higher deductible.
Some insurance companies that offer rideshare insurance endorsements include Allstate, which offers its Ride For Hire endorsement, and State Farm, which has a highly-rated mobile app and offers over a dozen discounts.
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Lyft insurance endorsements
Lyft insurance covers drivers only part of the time, and for the rest, they need a rideshare-friendly car insurance policy. Lyft maintains at least $1,000,000 for third-party auto liability coverage and first-party coverages, which may include uninsured motorist coverage, underinsured motorist coverage, PIP, MedPay, and/or Occupational Accident coverage. However, Lyft's insurance policies lead to coverage gaps that can cost you money. For instance, in Arizona and Nebraska, third-party liability insurance is $25,000/per person for bodily injury; $50,000/accident for bodily injury and $20,000/accident for property damage, consistent with state requirements.
Rideshare insurance is additional coverage available via a separate, standalone policy or by adding an endorsement to your personal policy. This coverage can fill coverage gaps in Lyft's insurance. Lyft's insurance coverage is in effect from the moment you accept a ride request to the moment you drop your passenger off. It has a $2,500 deductible.
A rideshare endorsement will increase your premium, but it is significantly cheaper than a commercial policy, which could cost you thousands more annually. Getting a rideshare endorsement on your personal policy bridges the gap between when you're logged on but waiting for a ride request and when you're driving passengers or heading to pick someone up.
Some insurance companies that offer rideshare endorsements include:
- State Farm: Offers coverage during all three periods through an endorsement that's added to your personal policy. This increases your premium by 15% to 20%.
- Allstate's Ride For Hire endorsement: You only have to pay the deductible you chose for your car insurance, not Lyft's $2,500 deductible.
- USAA: Available to active-duty military, veterans, and their families, USAA offers a rideshare endorsement for as little as $6 a month.
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Frequently asked questions
Yes, you are required to carry liability insurance as a rideshare driver.
No, most personal auto insurance policies will not cover you while driving for Lyft.
Without the right insurance, you could be financially responsible for repairs and medical expenses if you’re in an accident. You also risk having your auto insurance policy canceled or a claim denied.
Lyft offers liability insurance and contingent comprehensive and collision coverage. However, these policies can leave coverage gaps. You can also purchase a commercial policy or add a rideshare endorsement to your personal auto policy.
Rideshare insurance rates are typically higher than personal auto insurance rates because rideshare drivers are considered riskier to insure. The cost of rideshare insurance varies depending on the insurance company and your individual rating factors.
