Lyft And Your Auto Insurance: What You Need To Know

Lyft drivers are required to have auto insurance that meets minimum state coverage requirements. However, most personal auto insurance policies are intended for personal use only and do not cover commercial activities such as ridesharing. Therefore, it is important for Lyft drivers to review their insurance coverage and understand what is covered by Lyft's insurance policy. Lyft provides liability insurance and contingent comprehensive and collision coverage, but there may be coverage gaps that increase financial risk in the event of an accident. As a result, Lyft drivers may need to purchase additional rideshare insurance or add a rideshare endorsement to their existing policy to ensure they have sufficient coverage.

Lyft's liability insurance and coverage gaps

Lyfts Liability Insurance and Coverage Gaps

Lyft provides liability, collision, and comprehensive coverage to all its drivers. However, the default insurance offered by Lyft is contingent and can leave gaps in your coverage, increasing your financial risk. Lyft's insurance coverage varies depending on the period of your trip.

Period 1:

Lyft offers the least coverage during this period. The app is on, and you are waiting for a ride request. Lyft provides liability coverage with limits of $50,000 per person for bodily injury, $100,000 per incident, and $25,000 for property damage coverage. These limits are lower than what most insurance experts recommend. Comprehensive and collision coverage are not offered during this period.

Period 2:

You have accepted a ride request and are traveling to the pickup location. Lyft provides higher liability limits and contingent comprehensive and collision coverage during this period.

Period 3:

You have picked up a passenger and are headed to the drop-off point. Lyft maintains the same coverage as Period 2, including $1 million of third-party liability coverage, uninsured/underinsured motorist bodily injury, and contingent comprehensive and collision coverage.

Coverage Gaps:

Lyft's insurance policies have coverage gaps that can result in higher out-of-pocket costs if you are involved in an accident. The liability coverage limits during Period 1 are lower than recommended, and comprehensive and collision coverage are not offered. Additionally, Lyft's contingent comprehensive and collision coverage during Periods 2 and 3 come with a $2,500 deductible, which can lead to significant out-of-pocket expenses.

To fill these coverage gaps, you may consider purchasing rideshare insurance or adding an endorsement to your existing policy specifically for ridesharing. This additional coverage can ensure you are fully protected while driving for Lyft.

Personal auto insurance policies and their limitations

Personal auto insurance policies are a standard form of insurance issued to personal drivers. They cover the policyholder and their passengers if they are in an accident. However, they are not always applicable when a driver is using their vehicle for business purposes, such as delivering pizzas or working for a rideshare company.

Personal auto insurance policies typically include liability coverage, which protects other drivers if the policyholder causes damage to them or their property. Liability coverage limits vary from state to state but typically include a minimum of $50,000 bodily injury per person, $100,000 bodily injury per accident, and $50,000 for property damage.

Personal auto insurance policies may also include medical payments coverage, which covers the medical costs of the policyholder and anyone in their vehicle at the time of the accident. Uninsured motorist coverage is another common feature, which protects the policyholder if they are in an accident with a driver who is uninsured or underinsured. This coverage can help with costs if the other driver is at fault.

Physical damage coverage is another component of personal auto insurance policies, which covers any physical damages to the policyholder's vehicle, including collision and non-collision damage. Comprehensive and collision coverage are optional add-on policies, but they may be required if the policyholder has a lease or loan on their vehicle.

It is important to note that personal auto insurance policies often do not cover commercial activities or the use of a vehicle for business purposes. Therefore, if a driver is working for a rideshare company, their personal policy will likely not cover them, and they may need to purchase additional rideshare insurance or a commercial policy.

Overall, while personal auto insurance policies provide valuable coverage for personal drivers, they have limitations when it comes to commercial or business use of a vehicle. It is important for drivers to carefully review their policy details and consider purchasing additional coverage if needed.

Additional insurance coverage options

Lyft insurance provides liability, collision, and comprehensive coverage, but the coverage varies depending on where you are in the rideshare process. When the app is off, your personal auto insurance coverage applies. When the app is on, and drivers are able to receive ride requests, Lyft maintains third-party liability insurance for covered accidents if your personal insurance does not apply. When the app is on, and drivers are en route to pick up passengers or during rides, Lyft maintains the following insurance for covered accidents:

• In most markets, at least $1,000,000 for third-party auto liability coverage.
• First-party coverages, which may include 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 ($2,500 deductible).

However, Lyft's insurance policies have coverage gaps that can result in higher out-of-pocket costs if you are involved in an accident while driving for Lyft. Therefore, it is recommended to purchase additional insurance coverage options, such as rideshare insurance or a rideshare endorsement, to ensure complete coverage whenever you drive.

Rideshare insurance is a specific type of commercial auto insurance policy designed for people who drive for rideshare or food delivery services. It fills the coverage gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer. While it is not legally required in most states, it is highly recommended to protect yourself financially in case of an accident while driving for a rideshare company.

Rideshare insurance is typically offered as an add-on to your personal auto policy or as a standalone policy. Some of the top rideshare insurance companies include:

• Geico
• Progressive
• USAA
• Allstate
• State Farm
• Farmers

The cost of rideshare insurance varies depending on the company, state, and your personal factors such as driving history and vehicle type. It is important to contact your insurance provider to discuss your specific needs and determine the coverage options available to you.

Lyft's insurance coverage for drivers

Lyft provides insurance coverage for its drivers, but the specifics of this coverage vary depending on the driver's location and the period of the ride. Here is a detailed overview of Lyft's insurance coverage for drivers:

Coverage When the App is Off

When the Lyft app is turned off, a driver's personal auto insurance coverage applies. If a driver has rented a car through Lyft's Express Drive program, the standard insurance included with the rental car applies. It is important to note that most personal auto insurance policies do not cover ridesharing activities, so drivers should check with their insurance providers to ensure they have the appropriate coverage.

Coverage When the App is On and Waiting for a Ride Request

During this period, Lyft provides third-party liability insurance for covered accidents if the driver's personal insurance does not apply. The coverage limits are typically $50,000 per person for bodily injury, $100,000 per incident, and $25,000 for property damage. However, these limits may vary in certain states, such as Arizona, Nebraska, and Maryland, to comply with local requirements.

Coverage When the App is On and Drivers are En Route to Pick Up Passengers

When drivers are on their way to pick up passengers, Lyft's insurance coverage increases. In most markets, Lyft provides at least $1,000,000 in third-party auto liability coverage. Lyft may also offer first-party coverages, including uninsured motorist coverage, underinsured motorist coverage, personal injury protection (PIP), medical payments (MedPay), and Occupational Accident coverage.

Additionally, 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.

Coverage When the App is On and a Ride is in Progress

During this period, Lyft maintains similar insurance coverages as the previous period, including third-party auto liability coverage of at least $1,000,000 and various first-party coverages. The contingent comprehensive and collision coverage, with a $2,500 deductible, also applies if the driver has the appropriate personal auto policy.

Exceptions and Considerations

It is important to note that Lyft's insurance coverage may have exceptions in certain locations, such as New York City, where Lyft does not procure a primary liability policy. In these cases, drivers may need to procure their own insurance policies.

Furthermore, Lyft's insurance coverage may not cover all potential costs associated with accidents or incidents. For example, the $2,500 deductible for the contingent comprehensive and collision coverage means that drivers will need to pay a significant amount out of pocket before Lyft's insurance covers the remaining expenses.

Therefore, it is recommended that drivers consider purchasing additional rideshare insurance or adding an endorsement to their existing personal policies to ensure complete coverage during all periods of the ride. This can help fill any coverage gaps and provide financial protection in the event of an accident while driving for Lyft.

Lyft's insurance coverage for passengers

Period 1: The app is on, and the driver is waiting for a ride request

During this period, Lyft maintains third-party liability insurance for covered accidents if the driver's personal insurance does not apply. The coverage limits are:

• $50,000/person for bodily injury
• $100,000/accident for bodily injury
• $25,000/accident for property damage

Period 2: The driver has been matched with a passenger and is on their way to the pickup location

During this period, Lyft maintains the following insurance for covered accidents:

• At least $1,000,000 for third-party auto liability coverage
• First-party coverages, which may include uninsured motorist coverage, underinsured motorist coverage, personal injury protection (PIP), medical payments (MedPay), and/or Occupational Accident coverage
• Contingent comprehensive and collision coverage up to the actual cash value of the car ($2,500 deductible)

Period 3: The passenger is in the car, and the ride is in progress

During this period, Lyft maintains the same insurance coverage as in Period 2.

It is important to note that Lyft's insurance coverage is contingent and may leave gaps, resulting in higher out-of-pocket costs for drivers and passengers in case of an accident. Therefore, it is recommended to have additional insurance coverage, such as ride-sharing insurance or a commercial policy, to ensure full protection.

Frequently asked questions