Understanding the Different Coverage Options in Rideshare Insurance for Lyft and Uber
If you're planning to drive for a ridesharing company like Uber or Lyft, you need to understand how insurance works. In most cases, your personal auto insurance won't cover you once you log into the app and wait for a ride request. Instead, the rideshare service's insurance policy will apply.
However, your coverage through the rideshare company may not be as extensive as your personal insurance policy. That's why it's essential to consider adding rideshare insurance coverage for Lyft or Uber through your carrier. Additional rideshare insurance can help you fill in any coverage gaps so you're fully protected when driving for a rideshare company.
What is rideshare insurance, and why is it necessary for Lyft and Uber drivers?
Rideshare insurance is an extension of your personal auto insurance policy that covers you when driving for a ridesharing company.
While rideshare companies provide some coverage when you drive for them, the extent of the coverage may be less than what you have under your personal auto insurance policy. The rideshare's insurance coverage amounts go up or down depending on what stage you are in the driving journey.
Purchasing separate rideshare insurance through an insurer can help you bridge coverage gaps while driving for a rideshare company. It can increase your coverage when waiting for a ride or help pay the rideshare insurance deductible if you're in an accident with passengers. Your rideshare insurance is active only when you're on the app, not when logged out or driving for personal reasons.
While the law requires rideshare companies to insure their drivers, coverage is limited when waiting for rides. The company's full policy takes effect when you're en route or traveling with client passengers.
“ Purchasing separate rideshare insurance through an insurer can help you bridge coverage gaps while driving for a rideshare company. ”
How does rideshare insurance coverage differ during app-off, app-on, en route, and ride-in-progress?
Four categories determine whether your rideshare insurance applies and what type of coverage is available during each stage.
1. App-off
You aren't waiting for new customers when the rideshare app is off. If you're on the road, it's considered a personal journey. Only your personal auto insurance can cover any injuries or damage to your vehicle sustained in a collision or other event, such as bad weather or vehicle theft.
The amount of your available coverage depends on your personal insurance policy. To drive with a rideshare company, you must have personal liability coverage at a minimum. You may opt for collision or comprehensive coverage if you finance your vehicle or want extra protection.
2. App-on
When you turn on your rideshare app, the company's liability insurance policy kicks in, and your personal auto insurance policy no longer applies. During this time, you may be waiting for customers but not have any passengers in your vehicle.
If you get in an accident during the app-on stage and you're at fault, the rideshare company isn't responsible for paying for damages to your vehicle. You'll need to foot the bill out-of-pocket unless you have personal rideshare insurance coverage.
3. En route
Once you accept a ride from a rideshare customer, the rideshare company's full insurance policy applies. You'll have coverage for your passenger's bodily injuries or property damage sustained in an accident, even if you're at fault.
If you have comprehensive and collision coverage under your personal injury policy, the rideshare company will cover the repair costs for your vehicle, provided you pay a deductible. However, rideshare company insurance does not automatically cover your personal injuries in an at-fault accident unless your state requires it or you purchase additional rideshare insurance through your provider.
4. Ride-in-progress
Coverage through the rideshare company continues throughout the trip until you drop off your passengers at their destination. If you're in an accident, the rideshare company fully covers your passengers for any bodily injuries they sustain. The rideshare company will pay the costs to repair your vehicle if you have comprehensive or collision insurance through your personal policy, provided you pay a deductible.
Keep in mind that the rideshare company won't pay for any injuries you sustain in an at-fault accident unless state law requires it to, you opt into the company's injury protection plan, or you purchase rideshare insurance through your insurer.
What are the typical insurance requirements for Lyft versus Uber?
Uber and Lyft driver insurance requirements hold drivers responsible for maintaining liability insurance policies that meet state minimums.
While you don't have to purchase additional rideshare insurance in most states, doing so offers greater protection from financial losses if your vehicle sustains damage or you're injured in an at-fault collision. The standard insurance for Uber drivers and Lyft is identical.
Both companies provide the following coverage:
- Offline: Your personal auto insurance covers any accidents or bodily injuries.
- Online/available for a trip: A minimum of 50/100/25 liability insurance, plus any extra coverage required by state laws, such as uninsured/underinsured driver coverage, personal injury protection (PIP), or medical payments.
- En route/on a trip: $1,000,000 or more for property damage, injuries to riders, and third parties involved in an accident when you are at fault. Coverage is available to repair your vehicle up to its actual cash value with a $2,500 deductible, assuming you carry comprehensive and collision coverage on your personal auto insurance policy.
Find the right coverage in your state
Can personal auto insurance be used in conjunction with rideshare insurance?
You must have personal auto insurance to drive for a rideshare company, but it won't cover you if you're in an accident while using the rideshare app. Rideshare companies will only cover repairs to your vehicle for an at-fault accident if your personal auto insurance includes comprehensive or collision coverage.
By purchasing rideshare insurance, you can fill in coverage gaps between the company's insurance plan and your personal auto insurance policy. Rideshare insurance may include additional coverage when waiting for rides and may pay the rideshare's deductible if your vehicle sustains damage in an at-fault accident or you suffer injuries. That way, you won't be on the hook for out-of-pocket expenses.
What additional coverage options should rideshare drivers consider?
The best way to protect yourself as a rideshare driver is to purchase additional rideshare insurance. Most major carriers offer optional rideshare insurance you can opt into. The coverage varies.
Some policies provide extra protection when the rideshare app is on and you're waiting for a new customer. You may also find a policy that pays the difference between your standard deductible and the rideshare's deductible if you're in an at-fault accident and your car requires repairs.
Purchasing rideshare insurance should fill in any gaps between your personal auto insurance policy and the rideshare's coverage. That way, you have the same — or additional — protection whether you're driving your vehicle for personal reasons or transferring rideshare passengers.