What Is Rideshare Insurance?
Rideshare insurance is a type of car insurance designed for drivers who perform services for companies like Uber, Lyft, DoorDash, etc. A standard auto insurance policy excludes driving for business purposes, so a rideshare policy is needed if you make income through driving. Only some insurance companies offer rideshare insurance.
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Traditional Auto Insurance Vs. Rideshare Insurance
Insurance for rideshare drivers differs from traditional auto insurance because it addresses their unique needs. A traditional auto insurance policy mainly covers personal use, leaving gaps when it comes to ridesharing as that is considered a business.
Commercial activities are often excluded from standard policies, potentially denying claims if you drive for a service such as Uber. As a result, rideshare insurance bridges these gaps for drivers, providing coverage for vehicle damage, liability for passengers, and uninsured motorists coverage.
You could be at risk if you drive for a rideshare company and have a standard personal auto policy. A rideshare insurance policy addresses this.
How Does Rideshare Insurance Work?
Rideshare insurance has coverage for different phases of the process. Your personal auto insurance policy will apply when you are not actively driving for the rideshare company. Some individual policies provide coverage when you have the app on but are not transporting anyone.
The rideshare insurance takes over when a ride is accepted or in progress, protecting against uninsured motorists and covering liability. In accidents caused by you, comprehensive and collision coverage applies to your vehicle.
In addition to covering your medical expenses, personal injury protection can also cover the passengers’ medical expenses. Be sure to read your policy to understand all coverages.
Rideshare insurance is typically available to drivers who are registered with ridesharing platforms like Uber or Lyft. The policy must also meet the insurer’s specific requirements, such as vehicle age and usage restrictions. You also need to have a personal auto policy. Different rideshare insurance carriers will have different eligibility requirements.
A rideshare insurance policy may provide coverage at different phases of the driving cycle:
- When you’re offline: In this phase, your personal auto insurance policy is in effect. Generally, rideshare work is not covered, but everyday driving activities, such as commuting and errands, are covered.
- When waiting for a ride request: A rideshare policy bridges the gap between personal and rideshare insurance when waiting for a ride request. In the event of an accident that occurs while the rideshare app is active but before accepting a ride request, it typically provides limited liability coverage.
- When you accept a request: Accepting a ride request fully engages your rideshare insurance. Besides liability coverage for passengers, It also provides coverage for uninsured/underinsured motorists, physical damage coverage for your vehicle, and medical payments/personal injury protection. As a rideshare driver, rideshare insurance helps to adequately cover you and your car while actively transporting passengers.
What’s Not Covered
There are limitations to rideshare insurance, including the following:
- Potential coverage gaps when the app is off or in personal use
- Restrictions on vehicle age and type
- Potential coverage caps
In order to fully understand the scope of coverage, drivers should carefully review their policy terms.
How Much Does Rideshare Insurance Cost?
Several factors affect the cost of rideshare insurance. Typically, you can expect to pay about 15-20% more than you pay for your personal policy due to the increased risk. Some things that affect the rates include:
- Location: Your rate can vary depending on where you live and drive, the state laws, and the crime and accident rate of your area.
- Coverage limits: Higher coverage limits typically result in higher premiums.
- Vehicle type: Your vehicle, including year, make, model, and value, can certainly impact the cost.
- Driving history: Your driving history will impact rates if you have a negative one. If your driving record is good, it should not affect it negatively.
- Deductibles: For your vehicle’s physical damage, the higher the deductible, the lower the premium. Just remember, that is more out of your pocket at claim time.
- Rideshare activity: How often you work will impact the rates as well.
Should You Get Rideshare Insurance?
Rideshare insurance is not for everyone, and it has advantages and disadvantages.
- Specialized coverage: If you drive for rideshare companies like Uber, Lyft, or DoorDash, you can benefit from the coverage offered by a rideshare insurance policy.
- Fills gaps: Driving for a rideshare company means a gap in insurance if you only have a personal auto insurance policy. Rideshare insurance fills in these gaps.
- Comprehensive protection: Your rideshare policy covers liability for passengers, uninsured/underinsured motorist incidents, and vehicle damage.
- Legal compliance: There are certain legal requirements in each state, and this type of insurance helps prevent your personal insurance from being canceled if you transfer the risk.
- Additional cost: Rideshare insurance means more cost, and paying for standard insurance and this additional coverage can cause a financial strain.
- Limited availability: Only some insurance companies offer insurance for rideshare drivers.
- Complexity: It can be a bit confusing knowing when your rideshare insurance kicks in versus personal auto insurance.
- Varied coverage: Different insurers who do offer rideshare insurance may have different coverages available.
- Reduced flexibility: Under some policies, the primary coverage is your personal auto insurance.
- Vehicle restrictions: Depending on the type and age of your vehicle, you may have trouble getting coverage.
How to Get Rideshare Insurance
Follow these steps to obtain rideshare insurance:
- Review your current auto insurance. Review your auto insurance policy to identify gaps in your rideshare coverage.
- Compare rideshare policies. Compare the policies, coverage limits, and costs of ridesharing insurance providers.
- Get quotes and information from selected insurers. It is essential to discuss your specific rideshare needs and any vehicle requirements they may have.
- Work with your chosen insurer. You can customize the rideshare insurance policy to suit your specific needs, including coverage for liability, uninsured/underinsured motorists, comprehensive, collision, and medical payments.
- Purchase the policy. The final step is to purchase the policy, ensuring that it effectively covers the gaps in coverage for ridesharing drivers.
- Let your work know. Inform your rideshare platform about your coverage, as they may require it for compliance.
All in All
Driving for a rideshare company has become a great way for many people to earn a living, especially since you can set your own hours. Whether it’s your main source of income or a side gig, your personal auto insurance will likely exclude any claims that happen during ridesharing.
If you are in an accident and have a ride in progress, you may have to pay for the expenses out of pocket. A rideshare insurance policy can help protect you and your vehicle.