Auto Insurance for Uber and Lyft Drivers | Rideshare Insurance

rideshare insurance

Lately, many folks are joining the “gig” economy by becoming a full-time freelancer or a part-time freelancer or “moonlighter.”

Since most adults own vehicles, one of the easiest ways to start working as a freelancer is to get into the ridesharing business.

What started out as a thorn in the side of cabdrivers has exploded into an industry where almost anyone with a qualified vehicle can participate and work for themselves. In this article, we’ll discuss what types of auto insurance an Uber and Lyft driver needs, or what we call rideshare insurance.

 What is Rideshare Insurance?

 

In simple terms, rideshare insurance is an endorsement on a personal auto policy that eliminates the liability exclusion pertaining to “business or commercial” use of your car.

Practically every auto insurance company excludes liability coverage in your car insurance policy while using the insured vehicle for commercial purposes such as “passengers for hire.”

This means that if you are in an at-fault accident that results in bodily injury or property damage to a third-party your car insurance policy will take care of your financial responsibility up to the limits in your policy

However, if an at-fault accident should happen while your insured vehicle is being used for business or commercial use, your insurance coverage would not respond unless you have an endorsement (add-on) to the policy that specifically eliminates the business or commercial use exclusion.

 Here’s what the exclusion language looks like: 

We do not provide Liability Coverage for any person:
5. For that person’s liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee.

 

Because of this exclusion in your personal auto policy, rideshare companies like Uber or Lyft provide drivers with liability insurance to protect the company from potential liability claims while you are driving their customers to or from a destination.

 

Just click on your state to see the cheapest auto insurance rates!

 

Here’s how Rideshare Company insurance works:

 

PERIOD

INSURANCE RESPONSIBLE

Period 0

This is when the app is off. Your personal auto policy covers you and your vehicle.

Period 1

The app is on and you’re waiting for someone to request a ride. Your personal policy doesn’t cover unless you have ridesharing coverage. Coverage from the company provides liability only.

Period 2

You’ve accepted a ride request and are en route to pickup your passenger. The rideshare company (Uber or Lyft) policy is in force.

Period 3

The passenger(s) is in your vehicle. The rideshare company is in force.

It’s important that every rideshare driver understands that they are at risk when the app is on and a passenger is not in the vehicle.

Rideshare Insurance from Uber or Lyft

 

Both Uber and Lyft are very transparent about the auto insurance they provide and when they provide it. It is up to the vehicle owner do review the coverage regarding the following:

  • When the coverage is in affect
  • What the liability limits are
  • What the uninsured motorist limits are
  • What the property damage liability is
  • What the physical damage coverage is and what deductibles will apply

Coverage and Limits offered by Uber and Lyft

 

We have verified coverages offered by Uber and Lyft for rideshare drivers and it’s important that you understand when the coverages are available:

When your app is off

  • Your personal auto policy coverage will apply

Available and waiting for a Ride Request (app is turned on)

Uber and Lyft provides third-party liability coverage if your personal auto policy does not apply

  • $50k bodily injury coverage per person
  • $100k bodily injury coverage per accident
  • $25k property damage coverage per accident

En route to pick up passenger(s) and while they’re in the vehicle

The Uber and Lyft insurance will cover in the event of a covered accident:

  • $1 million third-party bodily injury and property damage liability
  • Uninsured and underinsured motorist for bodily injury (limits vary by state)
  • Comprehensive coverage and collision coverage subject to the cash value of your vehicle and a $1,000 deductible

Both companies will also provide additional coverages like Medical Payments in states that require additional liability coverage.

 

What Uber and Lyft will not Cover

 

The insurance provided by your ridesharing company is done so to protect them and does not pay for your injuries or various other things while you are waiting on a fare, en route to a fare, or are transporting a fare.

These are some coverage gaps you can fill with your personal auto policy or other insurance policies:

  1. Injuries to you during an accident
  2. Injuries to non-paying passengers during an accident
  3. Roadside assistance due to mechanical breakdown
  4. Rental reimbursement coverage
  5. Damages to your vehicle when the app is off or while waiting on a ride request

 

How much does a Rideshare Endorsement Cost?

 

Like any other insurance coverage, the cost for the Rideshare Endorsement varies by insurance company and the state you are working in. Just like Uber and Lyft do not operate in every state and city, the Rideshare Endorsement is not available in every state and city.

Insurance CompanyRideshare StatesEstimated Costs of Coverage
AllstateAZ, CA, CO, DC, GA, IA, IL, IN, KY, KS, MD, ME, MI, NV, OH, OK, RI, SC, TN, TX, UT, WA, WIAdditional $15 to $30 per policy period
FarmersAL, AR, AZ, CA, CO, FL, GA, ID, IL, IA, KS, MD, MI, MN, MT, NE, NV, NJ, NM, ND, OH, OK, OR, TN, TX, UT, WITypically 25% more per policy period
GEICOAL, AZ, AR, CT, CO, DE, DC, GA, ID, IL, IN, IA, KS, LA, ME, MD, MN, MS, MO, NE, NM, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, VT, VA, WA, WV, WI, WYTypically 3 times the cost of a regular auto policy
SafecoAZ, CO, IL, IN, KS, MN, MO, OK, OR, TN, UT, WA, WI$10 or less per month
American FamilyAZ, CO, GA, ID, IN, KS, MO, ND, OH, OR, SD, UT, WI$10 or more per month
State FarmAL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, IA, ID, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, ND, NE, NH, NJ, NM, NV, OH, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY15% to 20% of the policy premium
USAAAL, AR, AZ, CA, CO, GA, DC DE, IA, ID, IL, IN, KS, KY, MA, MD, ME, MN, MO, MS, ND, NE, NH, NJ, NV, OH, OK, OR, TN, TX, UT, VT, WA, WV, WYStarts at $60 per month
ProgressiveAL, AR, AZ, CO, CT, DC, FL, GA, IA, ID, IL, IN, KY, LA, MA, ME, MI, MN, MO, MS, ND, NE, NM, OH, OK, PA, RI, SD, TN, TX, UT, VA, WA, WI, WV, WYPremium not available
MetLifeCA, CO, IL, TX, WAPremium not available
Mercury InsuranceAZ, CA, GA, IL, NV, OK, TXAbout $73 per year

For any reader that noticed Liberty Mutual not listed above, it’s because as of the writing of this article, Liberty Mutual will not cancel coverage if you use your car as a rideshare driver.

They have, however, just partnered with Uber to offer a hybrid policy in certain states that will combine personal and commercial auto coverage for policyholders that use their vehicle for ridesharing.

 

In Conclusion

 

As the “gig” economy grows larger and vehicle owners begin using personal vehicles for business, it’s critical that you speak with your insurance agent regarding coverage for business use.

Frequently Asked Questions

What is ride share insurance?

In simple terms, rideshare insurance is an endorsement on a personal auto policy that eliminates the liability exclusion pertaining to “business or commercial” use of your car.

What is not covered by an Uber or Lyft driver’s insurance?

The insurance provided by your ridesharing company, such as Uber or Lyft, is done so to protect them and does not pay for your injuries or various other things while you are waiting on a fare, en route to a fare, or are transporting a fare.

How much does a ride share endorsement cost for Uber and Lyft drivers?

Like any other insurance coverage, the cost for the Rideshare Endorsement varies by insurance company and the state you are working in. Just like Uber and Lyft do not operate in every state and city, the Rideshare Endorsement is not available in every state and city.