Orlando Harmon
As an Uber driver, you are considered an independent contractor and are responsible for paying your own taxes and keeping your own records. This includes deducting the cost of your auto insurance from your tax bill. Uber drivers can deduct the actual expenses of operating their vehicle or use the standard IRS mileage deduction.
| Characteristics | Values |
|---|---|
| Auto Insurance as a Tax Deduction | Can be deducted as an Actual Expense (not applicable if you claimed the Standard Mileage Deduction). Based on the business use of your vehicle. |
| Auto Insurance for Uber Drivers | Required, but not provided by Uber. Must be purchased separately as an additional policy feature called "rideshare coverage" or a "rideshare endorsement". |
What You'll Learn
Uber drivers are independent contractors, not employees
Uber drivers can deduct the actual expenses of operating their vehicles or use the standard IRS mileage deduction. They can also deduct the cost of their mobile phones and mobile plans, as these are essential to their work.
Being an independent contractor comes with benefits, such as the flexibility to set work hours and freedom from management and supervision. However, independent contractors are exempt from certain worker protections guaranteed by the Fair Labor Standards Act (FLSA), including the right to earn a minimum wage and overtime pay.
Uber has faced lawsuits from drivers who want to be classified as employees, which would entitle them to greater protection and benefits. In response, Uber has argued that drivers control how frequently and when they work, which makes them independent contractors.
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Uber drivers need to purchase rideshare insurance
As an Uber driver, you are considered an independent contractor, not an employee. This means that you are responsible for paying your own taxes and keeping your own records.
Uber maintains commercial auto insurance on your behalf for ridesharing and delivery activities when you are driving on the Uber platform. However, when you are not driving with Uber, you are responsible for maintaining your own personal auto insurance.
You must maintain personal automobile insurance at the mandatory minimum limits and provide proof of your insurance to drive with Uber. This insurance covers you when you are offline.
When you are online and available for a trip, Uber's third-party liability insurance covers the cost of injuries or damage in the following amounts:
- $50,000 per person and $100,000 per accident for injuries
- $25,000 in property damage per accident
Depending on your state, Uber may also maintain additional coverage for you and your riders, including:
- Coverage for injuries in a hit-and-run or an accident caused by an uninsured or underinsured driver
- Personal injury protection, including medical expenses and lost wages for you and your riders, regardless of who is at fault
- Medical payments coverage for you and your riders, regardless of who is at fault
When you are en route or on a trip, Uber maintains insurance that covers at least $1,000,000 for property damage and injuries to riders and third parties in an accident where you are at fault. This insurance also covers the cost of repairing your car, up to the actual cash value, with a $2,500 deductible.
In most US states, you can also purchase Optional Injury Protection to cover additional medical expenses if you are injured in an accident.
As an Uber driver, you can deduct the actual expenses of operating your vehicle, including auto insurance, or you can use the standard IRS mileage deduction. To deduct auto insurance as an actual expense, you must maintain a log of your business mileage and expenses.
If you are looking to rent a car specifically for Uber, you can do so through their Vehicle Marketplace, which offers rentals from various companies, including Hertz and Avis. Insurance is typically included in the weekly rental cost, with a $1,000 deductible.
In summary, as an Uber driver, you are responsible for maintaining your own personal auto insurance when offline, while Uber maintains insurance coverage for you when online, en route, or on a trip. You can deduct your auto insurance expenses when filing your taxes, and you also have the option to rent a car specifically for Uber through their Vehicle Marketplace.
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Uber offers supplemental insurance coverage
As a driver-partner for Uber in the US, you are considered self-employed, and so you are responsible for filing your own tax returns and paying taxes on your earnings. You can, however, deduct the cost of your vehicle, including insurance, fuel, maintenance, and other operating expenses, from your Uber earnings when filing your taxes.
In most US states, you can also purchase Optional Injury Protection to cover any additional medical expenses incurred if you are hurt in an accident. This insurance, pioneered by Uber, is designed specifically for drivers and is available for less than $0.03 a mile. It includes earnings replacement of up to a maximum of $500 per week and accident-related medical expenses of up to a maximum of $1,000,000 with no deductible or copay. It also provides up to a maximum of $150,000 for your family.
Depending on your state's laws, Uber may also maintain extra coverage for you and your riders, including:
- Personal injury protection, including medical expenses and lost wages for you and your riders, regardless of who was at fault.
- Medical payments coverage for you and your riders, no matter who was at fault.
- Coverage for you and your riders for injuries sustained in a hit-and-run or an accident caused by an underinsured or uninsured driver.
Uber also maintains some of the most comprehensive insurance for ridesharing and deliveries. This includes insurance that covers at least $1,000,000 for property damage and injuries to riders and third parties in an accident where you are at fault. It also includes insurance that covers the cost of repairing your car, up to the actual cash value, with a $2,500 deductible, provided your personal insurance includes comprehensive and collision coverage. This extra insurance protects your car, regardless of who is at fault, as long as you maintain comprehensive and collision coverage on your own vehicle.
In addition, if you are injured in an accident while driving on the Uber platform, you may be able to claim against the liability insurance of the other driver, depending on your state, your app status, and whether you are providing rideshare or delivery services.
Uber also offers pioneering protections for drivers through its Optional Injury Protection insurance. This optional insurance product provides financial support for drivers and delivery people who are injured in a covered accident while using the Driver app. It is not health insurance and is available for purchase in certain states. It covers drivers, delivery people, and their families in the event of an accident but does not cover injuries that occur when the Driver app is not in use, non-occupational illnesses, or pre-existing conditions.
To purchase Optional Injury Protection, log in to your Driver app and select it from the Account menu. If you are eligible, you will be able to review the terms and conditions and purchase the insurance. You can also purchase this insurance by calling 888-223-5555.
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Uber drivers can deduct auto insurance as an actual expense
As an Uber driver, you are considered an independent contractor, and you are responsible for paying your own taxes and keeping your own records. You can deduct auto insurance as an actual expense, but this is not applicable if you claimed the Standard Mileage Rate Deduction.
If you choose to use the standard mileage deduction, you cannot deduct actual costs of operating a vehicle, such as depreciation, lease payments, maintenance and repairs, gas, oil, insurance, or vehicle registration fees. However, if you choose to deduct actual car expenses, you can deduct a percentage of your actual costs for gas, repairs, vehicle depreciation, insurance, and other vehicle-related costs. This percentage is based on how much you use the vehicle for business.
To determine which method gives you a larger deduction, it is recommended that you calculate the deductions both ways.
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Uber drivers need to check their state's requirements for a commercial driver's license
As an Uber driver, you are considered an independent contractor, and you are responsible for paying your own taxes and keeping your records. You can deduct your auto insurance as an actual expense, but this is not applicable if you claimed the standard mileage deduction.
Regarding licensing, Uber welcomes drivers from other parts of the driving industry, such as bus, truck, taxi, limo, catering, and commercial drivers. However, to be a driver in Houston, for example, you must meet certain requirements: meet the minimum age to drive in your city, have at least one year of driving experience, and clear a background check. The documents you’ll need to submit are a valid driver's license; proof of residency in your city, state, or province; and insurance if you plan to drive your own car.
For more information on the requirements to drive with Uber, you can visit uber.com/drive/requirements.
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Frequently asked questions
As an Uber driver, you are considered an independent contractor, so you need to report your income on a Schedule C, Profit or Loss from Business form. You are required to report all of your Uber income to the IRS, even if you don't receive a 1099 form.
You can claim deductions for the business use of your car, either by claiming the Standard Mileage Rate or the Actual Expenses for your vehicle. You can also deduct the business use of your cell phone, including the cost of the phone itself and your wireless plan.
Yes, Uber provides supplemental insurance coverage for drivers, but only while the app is on. When the Uber app is off, drivers are covered by their own personal car insurance.
