Driving for ride-sharing companies like Uber, Lyft, or other similar platforms can be a great way to earn extra income. However, standard personal auto insurance typically doesn’t cover you while you’re driving for a ride-share service. As a ride-share driver, you need to understand how to properly insure yourself and your vehicle to ensure you are fully covered in the event of an accident.
In this guide, we’ll discuss how car insurance for ride-share drivers works, the coverage provided by companies like Uber and Lyft, and what additional insurance you may need.
1. Why Ride-Share Drivers Need Special Insurance
Most personal auto insurance policies have exclusions for vehicles being used for commercial purposes, including ride-sharing. This means that if you’re driving for Uber or Lyft and get into an accident, your policy may deny your claim because the vehicle was being used for a business activity.
Ride-share companies offer some insurance coverage for their drivers, but this coverage is limited and varies depending on what stage of the ride-sharing process you’re in. To fill these coverage gaps, you may need additional insurance called ride-share insurance.
Key Reasons You Need Ride-Share Insurance:
- Commercial use exclusion: Most personal policies won’t cover you while you’re driving for hire.
- Gaps in ride-share company insurance: Uber and Lyft only provide certain types of coverage at specific times, leaving gaps when you’re waiting for a passenger.
- Liability protection: If you’re at fault in an accident, ride-share insurance helps ensure you’re protected from financial responsibility for property damage or injury to others.
To be fully covered, ride-share drivers often need special ride-share insurance to fill in the gaps left by personal auto insurance and the coverage provided by Uber or Lyft.
2. Understanding Ride-Share Insurance Coverage Periods
Ride-share insurance coverage is divided into three periods based on whether you have the ride-sharing app on and whether you’re carrying passengers. Different insurance policies apply at each stage of the ride.
Ride-Share Periods:
- Period 1 (App on, waiting for a ride request): The app is on, but you haven’t accepted a ride request yet. Uber and Lyft provide limited liability coverage, but no collision or comprehensive coverage for your vehicle. You are responsible for damage to your car if an accident occurs.
- Period 2 (En route to pick up a passenger): You’ve accepted a ride and are driving to pick up the passenger. Uber and Lyft provide more comprehensive coverage during this time, including liability, collision, and comprehensive coverage (if you have those coverages on your policy).
- Period 3 (Passenger in the car): Once you have a passenger in the car, you have full coverage from Uber or Lyft, including $1 million in liability, collision, and comprehensive coverage, and uninsured/underinsured motorist coverage.
While Uber and Lyft offer significant coverage in Periods 2 and 3, Period 1 has the biggest coverage gap. You are only covered for liability in Period 1, and there is no coverage for damage to your vehicle unless you have additional ride-share insurance.
3. What Is Ride-Share Insurance?
Ride-share insurance is a specialized type of car insurance designed to cover the gaps between your auto policy and the coverage provided by Uber and Lyft. It ensures that you have continuous protection, whether you’re waiting for a ride request (Period 1), driving to pick up a passenger (Period 2), or transporting a passenger (Period 3).
How Ride-Share Insurance Works:
- Hybrid policy: Ride-share insurance often combines aspects of personal and commercial insurance to cover your vehicle both when you’re driving for ride-sharing and when you’re using the car for personal purposes.
- Gap coverage: It fills the coverage gaps left by ride-sharing companies during Period 1, offering additional liability protection and sometimes extending collision and comprehensive coverage.
With ride-share insurance, you can ensure you’re covered at all stages of driving for Uber or Lyft, even during the vulnerable period when you’re waiting for a ride request.
4. What Does Ride-Share Insurance Cover?
Ride-share insurance supplements both your auto policy and the coverage offered by the ride-sharing company. It is designed to provide additional protection during the periods when Uber or Lyft’s insurance might not fully protect you.
Common Coverage Options:
- Liability coverage: Provides coverage if you’re responsible for an accident and need to pay for injuries or property damage to others. This helps fill the gap during Period 1 when Uber and Lyft offer only limited liability coverage.
- Collision and comprehensive coverage: Pays for damage to your vehicle caused by an accident or non-collision events (like theft, fire, or weather-related damage). Ride-share insurance ensures you’re covered during Period 1, as well as Periods 2 and 3.
- Uninsured/underinsured motorist coverage: Protects you if you’re hit by a driver who doesn’t have insurance or doesn’t have enough coverage to pay for the damages. This can provide added protection beyond what Uber or Lyft offers.
- Medical payments: This covers medical expenses for you and your passengers if you’re injured in an accident, regardless of who is at fault.
Having ride-share insurance means you’re fully covered, regardless of which period of the ride-sharing process you’re in.
5. What Insurance Does Uber and Lyft Provide?
While Uber and Lyft do provide insurance coverage for their drivers, it’s important to understand that this coverage is not always comprehensive. Here’s a breakdown of what each company offers during the three ride-share periods:
Uber and Lyft Coverage:
- Period 1: Liability coverage only, with limits of $50,000 per person $100,000 per accident for bodily injury, and $25,000 for property damage. No collision or comprehensive coverage.
- Period 2 and 3: $1 million in liability coverage, plus collision and comprehensive coverage if you already have those coverages on your policy. A deductible applies (typically $2,500 for Uber and Lyft).
While the coverage is extensive in Periods 2 and 3, the lack of coverage in Period 1 means you could be responsible for damage to your vehicle if you’re in an accident while waiting for a ride request.
6. How Much Does Ride-Share Insurance Cost?
The cost of ride-share insurance varies based on factors such as your driving history, the type of vehicle you drive, and where you live. However, ride-share insurance is generally affordable compared to commercial policies and is often available as an add-on (endorsement) to your auto insurance policy.
Average Cost of Ride-Share Insurance:
- Add-on policies: Typically cost between $10 and $30 per month in addition to your auto insurance premium.
- Standalone ride-share insurance: If purchased separately, the cost will depend on the coverage you select, but it’s usually more affordable than a full commercial insurance policy.
While ride-share insurance adds to your monthly costs, it’s a small price to pay for peace of mind knowing that you’re fully covered.
7. How to Get Ride-Share Insurance
To get ride-share insurance, start by checking with your current auto insurance provider to see if they offer this coverage. Many major insurers now provide ride-share endorsements, and some may require you to switch to a different type of policy if they don’t offer it as an add-on.
Steps to Get Ride-Share Insurance:
- Contact your insurer: Ask if they offer ride-share coverage or an endorsement of your existing policy.
- Compare quotes: If your insurer doesn’t offer ride-share insurance, shop around with companies that do, such as State Farm, Progressive, Geico, Allstate, and Farmers.
- Understand the coverage: Make sure the policy fills in the gaps in Uber and Lyft’s insurance, especially during Period 1.
- Add the coverage: Once you’ve selected the right insurer, you can add ride-share insurance to your existing policy or purchase it as a separate policy.
Make sure the ride-share insurance covers you fully during all stages of the ride-sharing process to avoid potential gaps in coverage.
8. Conclusion: Is Ride-Share Insurance Worth It?
If you’re driving for Uber, Lyft, or any other ride-sharing service, ride-share insurance is essential for ensuring you’re fully covered. The insurance provided by ride-share companies has significant gaps, especially when you’re waiting for a ride request. Ride-share insurance fills those gaps and protects you from potentially expensive repairs, liability claims, and medical bills in the event of an accident.
Considering the relatively low cost of ride-share insurance, it’s a worthwhile investment to protect yourself and your vehicle. If you’re using your vehicle for both personal and ride-share driving, ride-share insurance is the best way to make sure you’re always covered, no matter what happens on the road.
