What You Must Know
Driving for rideshare services like Uber and Lyft has become a popular way to earn extra income or even a full-time living. However, if you’re an Uber or Lyft driver, it’s crucial to understand how car insurance works in this unique situation. Traditional personal auto insurance often doesn’t cover commercial activities like ridesharing, so knowing what insurance you need can protect you financially and keep you legally compliant.
Why Regular Car Insurance Isn’t Enough
Most personal auto insurance policies exclude coverage when you’re driving for hire or using your vehicle for commercial purposes. This means if you get into an accident while driving for Uber or Lyft, your personal insurance could deny your claim, leaving you responsible for costly damages or injuries.
Understanding Rideshare Insurance Requirements
Rideshare companies require drivers to have insurance that covers them during different phases of rideshare driving:
1. App Off
When you’re using your car for personal use (app off), your personal auto insurance covers you, just like any non-rideshare driver.
2. App On, No Passenger
When the app is on and you’re waiting for a ride request, rideshare companies typically provide limited liability coverage, but this varies by state and company. This period can be a gray area for personal insurance, so having a rideshare endorsement or commercial policy is beneficial.
3. Passenger On Board
Once you accept a ride and have a passenger, rideshare companies provide higher liability coverage, including bodily injury and property damage, plus contingent comprehensive and collision coverage in some cases.
What Insurance Should Uber and Lyft Drivers Have?
1. Rideshare Endorsement or Commercial Policy
Some insurers offer a rideshare endorsement that extends your personal policy to cover driving for Uber and Lyft. Others recommend getting a commercial auto insurance policy, especially if you drive full-time, as it provides more comprehensive protection.
2. Gap Coverage
Rideshare insurance provided by Uber and Lyft may not cover everything, especially if you have an accident during the app-on-no-passenger period. Gap coverage fills in those gaps to protect you.
Tips to Lower Your Rideshare Insurance Costs
- Shop around: Different insurers have varying policies and rates for rideshare drivers.
- Bundle policies: Combine your rideshare insurance with home or renters insurance for discounts.
- Maintain a clean driving record: Safe driving can reduce your premiums.
- Use a fuel-efficient or safer car: Some insurers offer discounts for these vehicles.
Final Thoughts
If you drive for Uber or Lyft, having the right insurance is non-negotiable. Understanding how rideshare insurance works and choosing proper coverage protects you, your passengers, and your finances. Always review your policy, know your state’s regulations, and shop for the best coverage options.