Rideshare Risks: What To Keep From Your Auto Insurer

If you're a rideshare driver, it's important to know what to tell your auto insurance company and what not to tell them. While it's essential to inform them that you're a rideshare driver, you should also be aware of the limitations of your personal auto insurance policy and the gaps in coverage that may exist while you're working. Failing to disclose your rideshare activities could result in your policy being cancelled or claims being denied.

Rideshare companies like Uber and Lyft typically provide commercial insurance coverage for their drivers, but this coverage may not be sufficient. It's important to understand the different periods or stages of a rideshare trip and how the insurance coverage varies during these periods. For example, during the waiting period when you have the app on but haven't accepted a request, your personal insurance policy may not cover you, leaving you vulnerable in the event of an accident.

To fill these coverage gaps, you may need to purchase additional rideshare insurance or a commercial policy. However, not all insurance companies offer rideshare insurance, and the availability and cost of this coverage can vary by state and company. It's crucial to carefully review the policies and understand the limitations to ensure you have adequate protection while driving for a rideshare company.

You must tell your insurance company that you use your car for commercial purposes

If you are a rideshare driver, you must tell your insurance company that you use your car for commercial purposes. This is because your personal auto insurance policy does not cover you while working for a ridesharing company. If you fail to disclose this information, your insurance company could cancel your policy.

Ridesharing companies like Uber and Lyft provide insurance coverage for their drivers, but it is limited and does not apply during the entire period that drivers are working. There is usually a gap in coverage between when a driver's personal policy ends and the insurance provided by the ridesharing company kicks in. This gap in coverage occurs when the app is turned on and the driver is waiting for a ride request. During this period, known as Period 1, ridesharing companies only provide minimal insurance coverage, which may be limited to liability insurance.

As a result, rideshare drivers need to purchase additional rideshare insurance to fill in the gaps in coverage. This can usually be added as an endorsement to an existing policy, although not all insurance companies offer this option. If rideshare insurance is not available, drivers may need to purchase a commercial auto insurance policy, which can be more expensive.

Rideshare insurance is relatively inexpensive, often costing between $6 and $30 per month. It is important to note that rideshare insurance is not the same as commercial auto insurance, which is typically reserved for larger businesses with fleets of vehicles or vehicles used exclusively for commercial purposes.

By disclosing that you use your car for commercial purposes and purchasing the appropriate insurance, you can ensure that you have the necessary coverage in the event of an accident while driving for a ridesharing company.

Your personal auto insurer likely won't cover accidents that happen during ridesharing

If you're considering becoming a rideshare driver, it's important to understand the insurance implications. While ridesharing can be a great way to earn some extra income, it's crucial to ensure you have the right insurance coverage in place. Here's why your personal auto insurer likely won't cover accidents that happen during ridesharing:

Limited Coverage by Personal Auto Insurance

Personal auto insurance policies typically do not cover commercial driving activities, such as transporting passengers or goods for money. This means that if you get into an accident while driving for a rideshare company, your personal auto insurance policy will not provide coverage. It's important to understand that personal auto insurance is designed for personal use, not for commercial activities such as ridesharing.

Gaps in Rideshare Company Insurance

Rideshare companies like Uber and Lyft do provide insurance coverage for their drivers, but it's important to note that this coverage is limited and may not be sufficient in the event of an accident. There are usually gaps in their insurance policies, particularly during the period when you are waiting for a ride request (often referred to as "Period 1"). During this time, you may not be covered by either your personal auto insurance or the rideshare company's insurance policy, leaving you financially vulnerable in the event of an accident.

The Need for Rideshare Insurance

To fill the gaps in coverage, rideshare drivers typically need to purchase rideshare insurance. This type of insurance is designed specifically for drivers who use their vehicles for commercial purposes, such as ridesharing or delivery services. It provides additional coverage during the periods when your personal auto insurance or the rideshare company's insurance may not apply. By purchasing rideshare insurance, you can ensure that you have continuous coverage throughout your ridesharing trip, including while waiting for ride requests.

Informing Your Insurer

It's important to be transparent with your personal auto insurer about your ridesharing activities. Failing to disclose this information could result in your policy being cancelled or your claim being denied in the event of an accident. It's always best to be proactive and inform your insurer about any changes in the use of your vehicle to ensure you have the appropriate coverage in place.

Understanding Your Coverage

Before signing up as a rideshare driver, take the time to review the insurance policies offered by the rideshare company and understand the gaps in coverage. Then, contact your personal auto insurer to discuss your options for adding rideshare insurance to your existing policy or purchasing a separate commercial auto insurance policy. This will ensure that you have the necessary coverage in place to protect yourself financially in the event of an accident during your ridesharing gig.

You'll need to add rideshare coverage to your personal policy through your insurer

If you're driving for a ride-hailing or delivery service app, you'll need to add rideshare coverage to your personal policy through your insurer. This is because your personal auto insurer likely won't cover accidents that occur during your ridesharing gig and could cancel your policy if they find out you haven't disclosed this information.

Rideshare insurance fills the gaps in coverage between your personal policy and any insurance provided by the ride-hailing or delivery company. It is not available everywhere, so if you can't get it, you'll need a commercial auto insurance policy to be fully insured and avoid being dropped by your carrier.

Rideshare insurance for ride-hailing services like Uber or Lyft provides minimal coverage while you have the app on and are waiting for a request. More complete coverage kicks in once you've accepted a ride and are carrying passengers.

Here's a breakdown of when a personal policy with rideshare insurance and a rideshare company's insurance would primarily apply during a shift:

• Personal policy with rideshare insurance: Limited to liability coverage only while the app is on and you're waiting for a ride request. Also limited to liability coverage only after you've dropped off your passenger, the app is on, and you're waiting for your next ride.
• Uber and Lyft insurance: Provides up to $1,000,000 in liability coverage to pay for injuries and property damage you cause in an accident. If you have comprehensive and collision insurance on your personal policy, Uber or Lyft will also pay to repair or replace your car if it gets damaged, regardless of fault. They will, however, require you to pay their deductible, which is your share of the repair costs.

Rideshare insurance is usually a hybrid of the coverage offered by your ridesharing company and the rideshare coverage added to your personal auto policy. You typically can't buy it as a stand-alone policy. When seeking out rideshare insurance, be sure to tell your personal auto insurer that you're considering driving for a ride-hail or delivery company, figure out the gaps in coverage, and ask your insurer if they can fill those gaps.

If your current insurer doesn't offer rideshare insurance, you can turn to major car insurance companies like Allstate, State Farm, Progressive, GEICO, American Family, and Bristol West, among others.

Rideshare insurance isn't available everywhere

Rideshare insurance is not available everywhere, and it is essential to understand the coverage provided by your rideshare company and your personal auto insurance policy. While companies like Uber and Lyft provide coverage for their drivers, there are limitations, especially during the "app-on" period when waiting for ride requests. This period, often referred to as Period 1, has limited insurance coverage from both the rideshare company and your personal auto insurance policy, creating a coverage gap.

To address this gap, some insurance companies offer rideshare insurance as an add-on to your existing policy. However, not all insurers provide this option, and those that do may have geographic restrictions. For example, Travelers offers limited rideshare coverage as an add-on in some states but not in California. Similarly, GEICO offers limited rideshare coverage in certain states and situations.

If you are unable to obtain rideshare insurance, you may need to consider a commercial auto insurance policy, particularly if you use your vehicle for business purposes, such as driving for Uber, Lyft, or delivery services like DoorDash. Commercial insurance policies are typically more expensive and designed for businesses with fleets of vehicles or those used exclusively for commercial purposes.

Before choosing a rideshare or commercial policy, it is crucial to understand the specific coverage offered by your rideshare company and your personal auto insurance provider. Review their policies to identify any gaps in coverage and ensure you are adequately protected while driving for these services.

If you can't get it, you'll need a commercial auto insurance policy

If you can't get rideshare insurance, you'll need a commercial auto insurance policy. This is because your personal auto insurance policy does not cover you for transporting people in exchange for money. Accidents that occur while you are driving for business purposes may not be covered by your personal car insurance policy.

Commercial auto insurance is designed for larger businesses and usually reserved for a fleet of vehicles or vehicles used exclusively for commercial purposes. However, if you are using your vehicle for commercial use, even on a part-time basis, you will need a commercial policy or rideshare insurance to ensure you are fully financially protected.

Commercial auto insurance policies are more expensive than personal car insurance policies but cheaper than rideshare insurance. The exact price will depend on factors such as your driving history, location, coverage limits, credit score, and deductible.

Frequently asked questions