Rideshare Gap Insurance: Filling The Coverage Gap

Rideshare gap 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. This type of insurance is important because, without it, you could be faced with paying out of pocket for steep car repair and medical bills in the event of an accident while driving for a rideshare company.

What is ridesharing?

Ridesharing is a service that arranges one-way transportation on short notice. Ridesharing companies, also known as ride-hailing services, match passengers with drivers of vehicles for hire via websites and mobile apps. Unlike taxis, these vehicles cannot be hailed from the street.

Ridesharing companies were founded after the proliferation of the internet and mobile apps. Uber was founded in 2009, followed by Ola Cabs in 2010, Yandex Taxi and Sidecar in 2011, and Lyft, DiDi, Careem, and Bolt in 2012.

To use a ridesharing service, you need a smartphone, a credit card or PayPal account, and the ridesharing app. After downloading the app and signing up, you can enter your destination, and a nearby driver will accept your request. The driver picks you up and takes you to your destination, and your credit card is charged automatically through the app.

Ridesharing services offer different types of vehicles, from budget options that seat up to four passengers to larger vehicles with more room for people and cargo, and even premium rides in more luxurious vehicles. The price of ridesharing varies depending on factors such as distance, time of day, and type of vehicle.

Ridesharing is a convenient and budget-friendly way to travel, and it has become increasingly popular as more companies enter the market. It is also generally considered a more environmentally friendly alternative to driving alone, as it reduces traffic congestion and air pollution by utilizing existing transportation infrastructure more efficiently.

The legality of ridesharing companies varies by jurisdiction. In some areas, they are considered illegal taxi operations, while in other areas, they are subject to regulations that may include requirements for driver background checks, fares, caps on the number of drivers, insurance, licensing, and minimum wage.

When do you need rideshare gap insurance?

Rideshare gap insurance is needed when your personal auto insurance policy does not cover you for driving for a ridesharing service. This is the case for many people who drive for ridesharing services.

Ridesharing services like Uber and Lyft provide some insurance coverage for their drivers, but it is often limited and may not cover you in certain situations, such as when you are waiting for a ride request or when you have a passenger in your vehicle. This is where rideshare gap insurance comes in. It fills the coverage gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer.

Most insurers require you to add rideshare insurance to your personal auto policy if you drive for a ridesharing service. This is because engaging in ridesharing activities opens you up to potential liabilities that your personal auto policy may not cover. If you do not inform your insurer about your ridesharing activities, they could cancel or non-renew your policy if they find out.

Rideshare insurance is typically offered as an add-on to your existing personal auto policy and is relatively inexpensive, costing as little as $6 per month. It is important to note that rideshare insurance might not be available in every state, so it is recommended to speak with your insurance agent to understand what is specifically covered by your policy.

What does rideshare insurance cover?

Rideshare insurance is designed for people using their personal vehicles to provide ridesharing services. It bridges the gap between personal auto insurance and the coverage provided by the rideshare company. It is intended for drivers working with transportation network companies (TNCs) such as Uber or Lyft.

The specifics of rideshare insurance may vary by insurance company and the type of coverage you carry. However, some of the protections that may be provided include collision coverage, comprehensive coverage, uninsured/underinsured motorist coverage, and medical payments or personal injury protection.

Collision coverage pays for damages to your vehicle from an accident, regardless of fault. Comprehensive coverage takes care of non-collision damages, such as theft, vandalism, or weather-related damage. Uninsured/underinsured motorist coverage offers protection if you're involved in an accident with a driver who has insufficient or no insurance. Medical payments or personal injury protection cover medical expenses for you and your passengers, regardless of who is at fault.

Rideshare insurance fills in the gaps in coverage that may exist during the different stages of the ridesharing process. When the rideshare app is off and the driver is unavailable for hire, their personal auto insurance policy provides coverage. Once the driver turns on the ridesharing app and signals availability, their personal auto policy typically does not provide coverage due to the commercial nature of the activity. Rideshare companies may provide limited coverage during this "app-on" period, but it often comes with a high deductible and leaves many scenarios uncovered. Rideshare insurance is designed to address these gaps in coverage.

Once a ride request is accepted and throughout the trip duration, the rideshare company's commercial policy is usually in full effect. This coverage typically includes liability, uninsured/underinsured motorist coverage, and contingent collision and comprehensive coverage. However, specifics can vary by rideshare company and state.

Rideshare insurance is often offered as an endorsement to an existing car insurance policy, extending specific coverages to the personal policies of rideshare drivers to ensure they are covered during the "app-on" period.

How much does rideshare insurance cost?

The cost of rideshare insurance varies depending on the company and the state in which the driver operates. Some companies that offer rideshare insurance include State Farm, Farmers, Progressive, USAA, GEICO, Erie, Allstate, and Liberty Mutual.

State Farm

State Farm offers rideshare insurance in the form of an endorsement that can be added to an existing policy. This endorsement typically adds about 15-20% to the current premium.

Farmers

Farmers Insurance offers a rideshare-friendly policy add-on, which provides coverage during Period 1 (when the app is on, but there is no passenger). This add-on typically costs about 25% more than a standard policy.

Progressive

Progressive offers rideshare insurance in select states. One driver in California reported that their 6-month premium for a policy including rideshare insurance was $385.

USAA

USAA offers rideshare insurance as an add-on to an existing policy. This add-on typically costs around $6-$20 per month.

GEICO

GEICO offers rideshare insurance, although the cost is not specified.

Erie

Erie Insurance offers rideshare insurance in select states.

Allstate

Allstate offers rideshare insurance for around $10-$20 per month.

Liberty Mutual

Liberty Mutual offers rideshare insurance in select states.

Other Companies

Other companies that offer rideshare insurance include American Family Insurance, Mercury, MetLife, and Quoteasy/Bristol West. The cost of rideshare insurance from these companies is not specified.

What happens if you don't have rideshare insurance?

Rideshare insurance is a type of commercial auto insurance for people who drive for rideshare or food delivery services such as Uber, Lyft, DoorDash, and Postmates. It fills the gap between your personal auto insurance and the commercial auto insurance provided by your rideshare employer.

If you don't have rideshare insurance, you may not be covered by your personal auto insurance or your rideshare company's commercial policy during the "unmatched" time of the delivery. This is the time when you are logged into the rideshare app and waiting for a customer request. During this period, your personal policy won't cover you, and the rideshare company may only provide limited liability coverage.

Without rideshare insurance, you could be at risk of footing the bill for any medical bills, repairs, and legal fees that arise from an accident during this period. Additionally, if your insurance provider finds out that you're a rideshare driver without the appropriate coverage, they could drop you from their coverage and you'll be rated as a high-risk driver, resulting in much higher premiums.

Furthermore, in the event of an accident where you are at fault, your insurance provider may not cover the cost of damage to your vehicle, even if you have comprehensive and collision insurance policies. While the rideshare company may have a collision policy, it will likely come with a high deductible.

Therefore, it is essential to have rideshare insurance to ensure you are adequately covered during all periods of your rideshare journey.

Frequently asked questions