The Definitive Guide to Rideshare Insurance:
We can all agree that working as a rideshare driver is a pretty sweet profession.
The freedom of this type of work combined with a hefty salary can be irresistible, at first glance. However, the financial aspects of this work can make driving for rideshare companies slightly less promising.
When drivers transform a vehicle into a business operation the automobile is no longer considered to be for personal use only. Instead, insurance companies typically classify the automobile as a commercial vehicle, due to the additional assets a driver is transporting.
Also see: How Much Do Uber Drivers Make?
Drivers are required to upgrade their insurance coverage accordingly. Choosing to ignore this fact can be financially catastrophic.
If you are in an accident while on the job and do not have proper coverage, your insurance company can legally refuse to file your claim. Being in this type of situation can leave drivers paying for everyone’s medical and vehicle expenses completely out of pocket. Due to such a looming threat, drivers must find insurance that is specifically designed to cover rideshare services.
Fortunately, our team has spoken to dozens of experts and conducted countless hours of research into learning about rideshare insurance. We’ve shared our findings below:
What Does Rideshare Insurance Cover?
When you are driving your vehicle for personal use, regular insurance has you covered. However, personal insurance coverage stops once you log you’re your rideshare app. When this occurs, the insurance offered by transportation network companies kicks in. However, this rideshare insurance is liability only.
Liability insurance only covers the other person’s medical and vehicle expenses after an accident. It does not cover the rideshare driver’s bills during this timeframe. If the driver gets into an accident between turning on the rideshare app and getting a ride request, the incident will fall into a very expensive coverage gap.
Rideshare insurance is designed to eliminate this gap in coverage. It ensures that should an accident occur, you, your personal property, and the other person all have adequate coverage.
What Uber and Lyft Insurance Provides Drivers
There are four stages of a driver’s average workday. Most drivers are familiar with the first one: daily routine trips. Personal insurance typically covers this timeframe.
The next stage, when a driver is waiting for a ride request, is when drivers are vulnerable. This is where personal insurance no longer applies and liability-only coverage starts. Once a driver receives a ride request, the insurance offered by transportation network companies expand to cover all medical and vehicle expenses.
Uber and Lyft provide liability and collision coverage of up to $1 million on average. Although this hefty amount is usually adequate, the deductible for the coverage is steep. On average, drivers pay about $1,750 out of pocket before insurance kicks in. This is another area that rideshare insurance comes in handy. Rideshare coverage usually reduces the high deductible to a much more reasonable amount.
Rideshare Insurance Options
Rideshare coverage is the perfect balance between personal and commercial insurance. This type of insurance provides drivers with the protection they need to bridge the coverage gap. It’s also less expensive, on average, than commercial insurance premiums.
Unfortunately, rideshare coverage is not available in every state, nor do all insurance companies offer it. Rideshare insurance providers typically charge $50-$100 extra per year for the coverage.
To find out if your preferred insurance company offers rideshare coverage in your state, review the following list, or explore our more comprehensive list of rideshare insurance options.
Rideshare Insurance Providers
Allstate
Dubbed the Allstate Ride for Hire, this rideshare coverage can be added onto your current insurance plan for about $15-$30 a year.
Erie
Although Erie insurance has traditionally excluded coverage for taxi drivers, they have made an exception for rideshare insurance. Erie offers rideshare insurance, in addition to personal premiums, as a monthly fee that varies between $9-$15.
Farmers
Offering drivers rideshare insurance across more than half the United States, Farmers rideshare insurance comes at a hefty price: 25% more than your current rate. This estimation is gleaned from the estimated increase in the personal property involved, which increases by approximately 1.25%.
Geico
Geico offers rideshare coverage under the Geico Commercial plan. On average, drivers are charged about three times the rate of personal coverage alone.
Metlife
For Metlife, rideshare insurance is all about how many miles were driven during any given month. Due to this, the average monthly premium drivers are billed will vary according to the time that they spent on the road. Currently, Metlife Auto & Home insurance is available in almost every state.
Progressive
Favoring Lyft, Progressive’s rideshare insurance is currently only available in Texas. Progressive considers rideshare insurance as a personal policy. In theory, this means that insurance rates remain unchanged once they know about your business operation, however, no official estimation has been established.
State Farm
State Farm has defined rideshare insurance as an extension to personal policies. Due to the distinct declaration, the coverage should, in theory, be moderately priced.
Travelers Insurance
Defining rideshare coverage as a modified personal policy, Travelers only offers insurance for rideshare drivers in CO and IL. More information about Travelers rideshare insurance may be reviewed under their “Optional coverages” section.
USAA
Providing coverage to a selective group, USAA rideshare insurance adds about $6 a month to regular insurance policies. Select drivers include those who have served in the military or are related to a current USAA member as a partner or child.
How to Evaluate Rideshare Insurance Options
Car insurance rates vary based on the make, model, and year of your vehicle. Jeeps, for example, typically have a lower monthly premium due to the vehicle’s solid safety features, such as multistage airbags and electronic roll mitigation.
Other vehicles, such as a Mercedes, can be much more expensive. This is typically due to the increase in the cost of parts and repairs. Other contributing factors include the probability of a vehicle getting stolen and the known accident history of a specific type of vehicle across the industry.
Read: What to Expect from an Uber Vehicle Inspection
Insurance rates also come in tiers. Liability-only is much lower than other insurance options due to the fact that the policyholder is not personally covered in the case of an accident. Due to this often-misrepresented insurance, many drivers find themselves paying for their medical and vehicle expenses out of pocket.
Evaluating whether or not the risk of having to pay such a huge amount all at once in exchange for avoiding the higher monthly premium is entirely up to you as a business owner.
Combining insurance policies can be another great way to save on insurance. Many insurance companies offer a lower rate to customers who put their automobile and home insurance into one monthly bill. To find out more about how to further reduce your monthly insurance policy, be sure to ask your insurance provider for more information.
Finding the optimal balance between paying a high premium and a low deductible is a great way to stay safe and profitable. Although paying a lower monthly premium is very appealing, having to pay $1,500 or more out of pocket before insurance kicks in can be devastating.
Frequently Asked Rideshare Insurance Questions
What Should I Do If Rideshare Insurance Is Not Available in my State?
Unfortunately, rideshare insurance is not available in every state. Drivers in such locations should contact their insurance providers and ask about rideshare coverage. If they are unable to provide the coverage you need, consider purchasing commercial insurance as a last resort.
Isn’t Personal Insurance Enough?
No. Utilizing your vehicle as a business technically means it falls under commercial regulations. In other words, you, your vehicle, and your passengers may not be covered in the case of an accident. This can lead to lawsuits that could leave you in a painful financial strain, or even bankruptcy.
Do I Need to Tell My Insurance Provider Who I Drive For?
No. However, we recommend telling them. Some companies favor Lyft over Uber and may offer discounts accordingly. Nevertheless, let your insurance provider know how you are using your vehicle. Doing so protects you and your business from potentially catastrophic dilemmas.
Are Rideshare Claims Filed Differently Than Personal Ones?
Usually not. Uber requires drivers to send them an email if an accident occurs, whereas Lyft wants you to contact them by phone.
Make this the first step you take after an accident only if it occurred during the timeframe between accepting a ride request and dropping the passenger off. Remember that during this period, the insurance provided by your transportation network company is your primary provider. Wait to call your main insurance afterward.
If the accident occurs at any other time, contact your main auto insurance company first. They are considered your primary insurance in this situation.
What Do I Do If I Get Into an Accident Without Rideshare Insurance?
The consequences of getting into an accident while waiting for a ride request can be financially devastating, especially if your insurance company does not know how you are using your vehicle. In the event that your insurance provider does not cover the accident, the coverage from Lyft and Uber will start to take effect.
Unfortunately, the coverage provided in this situation is relatively low and is liability only, which can leave you footing the bill for all of your expenses. If the accident occurs between accepting a ride request and dropping a passenger off, Uber and Lyft will cover up to $1 million in damages. Although this amount covers medical and vehicle expenses, the deductible can be financially unbearable.
Is Rideshare Insurance Required to Drive for Uber or Lyft?
Many states require that drivers procure rideshare insurance to cover the coverage gap between turning on the rideshare app and getting a ride request. Although this is the safest option for drivers, the insurance offered by Uber and Lyft is sufficient to start driving with them.
Which Rideshare Insurance is the Most Cost Effective?
On average, USAA and Allstate offer customers the lowest rates. This does come at a disadvantage. The low rates offered by more affordable providers often come with high deductibles.
For example, paying a low monthly rate in exchange for having to pay $4,500 out of pocket to cover damages in an accident can be an extreme financial burden. Due to this, the rate offered by insurance companies may not be the most financially responsible option for you.
Are Passengers Covered in an Accident?
Yes. The $1 million coverage offered by Uber and Lyft will cover any medical bills your passengers accrue.
Our Take
Rideshare insurance is an essential aspect of driving for companies like Uber and Lyft. The extra coverage ensures that you are covered while you are waiting for a ride request. Although you may have to pay an additional monthly fee to have rideshare coverage, the added amount will prove worthwhile if you are ever in an accident.
Drivers should consider keeping the amount of their deductible saved up. Doing so will make it possible for drivers to get back on the road faster, regardless of whether or not they are at fault during an accident. After most accidents, there is a timeframe where driving is simply not an option. This can take a heavy toll on your income, so plan accordingly.
What’s your take on rideshare insurance?
Do you have any positive/negative experience with any of these providers?
Share your experiences in the comments below!
(This article was originally published at Ridester and was republished in agreement with Ridester.)
