Insurance Premiums: Uber Drivers Face Higher Rates

Uber and Lyft drivers are often concerned about the impact of their ridesharing activities on their insurance costs and coverage. While logged into the app, Uber provides insurance coverage for its drivers, including liability coverage for third parties in case of an accident. However, this does not replace the need for drivers to maintain their own personal auto insurance, which is required by law and applies when the driver app is turned off. The commercial use of a vehicle for ridesharing purposes can be considered higher-risk by insurance companies, potentially leading to increased premiums. Some insurance providers may even refuse to offer coverage to rideshare drivers or require a switch to a different provider. As a result, it is crucial for Uber drivers to understand their insurance coverage during different periods of their shift and carefully review their policies to avoid coverage gaps.

Uber's insurance policy

Uber maintains insurance on behalf of its drivers and delivery people. This insurance is provided in partnership with top US insurance companies. Uber's insurance policy is divided into four distinct periods, each with its own set of requirements and coverage.

Period 0 refers to when the Uber driver is offline. During this period, any accidents must be covered by the driver's personal insurance, which must meet the minimum automobile insurance requirements in the relevant state. For example, in California, drivers must have at least $15,000 in bodily injury coverage per person, $30,000 of bodily injury coverage per accident, and $5,000 for property damage coverage.

Period 1 begins when the driver is online and logged into the app but has not yet been matched with a rider. If an accident occurs during this period, Uber will offer third-party liability coverage if the driver's personal auto insurance doesn't apply. Uber's insurance coverage during Period 1 includes $50,000 of bodily injury liability per person, $100,000 of total bodily injury liability, and $30,000 of property damage liability.

Period 2 is when the driver is awaiting a ride request or has activated their app. Uber provides liability insurance of no less than $50,000 per person and $100,000 per accident for bodily injury and property damage. Additionally, there is coverage of $25,000 per collision for any onboard passengers during this stage.

Period 3 refers to when the driver is transporting a passenger. During this period, the risks and required limits increase significantly. Uber provides a minimum of $1,000,000 in coverage for injuries and maintains $25,000 in property damage liabilities.

It is important to note that Uber's insurance coverage may vary by state, and drivers should review their specific insurance policies to understand the changing regulations during each period. Additionally, Uber provides uninsured and underinsured motorist coverage of up to $1 million per accident for drivers and passengers while on a trip. This coverage helps protect drivers and passengers in the event of an accident with a driver whose insurance has lapsed or is inadequate.

While Uber provides insurance coverage for its drivers, it is recommended that drivers also maintain comprehensive and collision insurance on their personal auto policies. This additional coverage can provide further protection in the event of an accident.

Personal insurance

If you are considering becoming an Uber driver, it is important to understand how your personal insurance will be affected. While Uber does provide its own insurance coverage for drivers, this is not a substitute for personal insurance.

Firstly, it is important to note that personal auto insurance policies typically exclude coverage for driving-for-hire services. This means that if you are in an accident while working for Uber, your personal insurance policy will not provide any protection for you or your passengers. It is crucial to be upfront with your insurance company about your plans to drive for Uber and find out if you need to purchase additional commercial insurance or obtain a commercial driver's license. Failing to disclose this information to your insurance company may result in the cancellation of your policy or higher premiums in the future.

When you are driving for Uber, the company's insurance policy will take precedence over your personal insurance. Uber's insurance coverage varies depending on your status at the time of an accident. When the Uber app is turned on, a low level of liability insurance becomes active. Once you accept a trip, a higher level of coverage kicks in and remains in effect until the passenger exits the vehicle. Uber's insurance provides comprehensive coverage during active rides, including liability, collision, and uninsured motorist protection. However, it is important to note that Uber's coverage may not cover all potential risks, and there may be gaps in your protection.

To ensure you have adequate coverage, it is recommended to consider purchasing rideshare insurance or adding a Transportation Network endorsement to your personal policy. This type of insurance is designed to fill the gaps between personal and Uber-provided coverage, ensuring you are protected in all situations. Additionally, optional injury protection can provide valuable financial protection for you and your family in the event of an accident while working.

While being an Uber driver may not directly raise your personal insurance premiums, it is important to carefully review your policy and understand the exclusions and limitations. By being transparent with your insurance company and considering additional coverage options, you can ensure that you are fully protected while driving for Uber.

Ridesharing insurance

When working for a ridesharing company, there are typically four periods of insurance coverage, each with its own set of protections. Period 0 refers to when the driver is offline and not actively seeking fares. During this time, the driver's personal insurance policy applies, and ridesharing insurance is not necessary. Period 1 occurs when the driver is online and available to accept rides but has not yet been matched with a rider. In this phase, the ridesharing company may offer third-party liability coverage if the driver's personal auto insurance doesn't apply. Period 2 begins once the driver has accepted a ride request and is en route to pick up the rider. At this stage, the ridesharing company's commercial insurance policy typically becomes the primary coverage. Period 3 refers to when the driver has an active ride in progress and a passenger in the vehicle. During this period, the ridesharing company's commercial insurance serves as the primary coverage.

It is important to note that ridesharing insurance may not be available in all states, and the exact coverages provided can vary by state and insurance provider. Additionally, some insurance companies may increase premiums for rideshare drivers due to the increased risk of accidents associated with spending more time on the road. Furthermore, certain insurance carriers may refuse to offer coverage to individuals who use their vehicles for ridesharing purposes, so it is crucial to disclose this information to your insurance provider.

Commercial insurance

As an Uber driver, you will need to have your own commercial insurance if you are driving a commercial vehicle, such as a licensed for-hire vehicle, black car, limousine, livery vehicle, or taxi. This is a legal requirement.

Uber itself also provides insurance for rideshare and delivery drivers. This insurance is divided into four periods. During Period 0, the driver is offline, and any accident must be covered by the driver's personal insurance, which must meet the minimum automobile insurance requirements in the state. During Period 1, the driver is online but has not been matched with a rider. If the driver gets involved in an accident, Uber offers third-party liability if the driver's personal auto insurance doesn't apply. Period 2 begins when the driver has been matched with a rider but has not yet arrived at the pickup location. During this period, Uber's insurance provides third-party liability coverage and limited comprehensive and collision coverage. Finally, Period 3 begins when the driver arrives at the pickup location and continues until the rider exits the vehicle. During this period, Uber's insurance provides third-party liability coverage and comprehensive and collision coverage.

It is important to note that Uber's insurance does not cover regular maintenance on a driver's car, and the driver is responsible for their car maintenance. Additionally, Uber does not provide comprehensive or collision coverage for commercially insured livery drivers or for delivery drivers' vehicles for Uber Eats trips in certain states, such as New York.

Insurance premiums

The issue arises when a driver's personal auto insurance policy does not provide coverage for "driving-for-hire" or "commercial driving". In this case, the driver may find themselves underinsured or even completely uninsured for certain losses. To avoid this, Uber drivers can purchase supplemental commercial auto insurance or a "rideshare endorsement" from an insurance company. This type of policy will provide coverage for the driver while they are logged into the Uber app, waiting for rides, driving to the pickup location, and during the trip itself.

However, purchasing rideshare insurance will cause a driver's insurance premium to increase, regardless of how often they drive for Uber. This is because rideshare drivers are considered riskier to insure due to the increased number of miles driven, higher likelihood of driving in densely populated areas, and greater chance of an accident or claim. As a result, rideshare insurance policies typically have higher premiums than personal auto policies.

It is important for Uber drivers to be upfront with their insurance company about their rideshare activities to ensure they have the necessary coverage in place. Failure to disclose this information could result in the insurance company cancelling or refusing to renew the driver's personal auto policy.

Frequently asked questions