What Does Rideshare Insurance Cover?
Ridesharing is a relatively new industry that has grown in leaps and bounds in recent years. Because it occupies a unique, never-before-seen niche in the marketplace, government regulations and insurance companies have had to scramble to keep up.
If you are a driver for Uber or Lyft (or any similar company), you might assume that you are well-covered in the case of an accident while ridesharing. You would think this to be the case since you have protection from both your personal auto policy and the rideshare company’s policy. The truth is more complicated.
To effectively protect yourself as a rideshare driver, it is incumbent upon you to learn when you are covered, where there are gaps, and how you can fill them. For example, rideshare insurance is a product that most mainstream auto insurance companies now offer in some form to help drivers maintain coverage through all stages of their work.
What Is Rideshare Insurance?
Most people are familiar with and have private auto insurance for their personal vehicles. This type of coverage is active for essentially all personal uses of your car. But if you sometimes use your vehicle for commercial purposes (such as for ride-hailing work), your standard insurance will often not cover you or your property during that use.
Previously, a driver’s only option may have been to purchase an entire commercial auto insurance policy to cover their ridesharing activities. But this can be expensive, especially for someone trying to make a living through Uber, Lyft, or a similar service. The answer that insurance companies have come up with to address this problem is rideshare insurance/ ride-hailing insurance.
Ride-hailing insurance is an insurance policy that drivers can buy, which will provide protection for parts of their job that neither their personal policy nor the employer’s insurance policy will cover. Typically, drivers have the option of purchasing such a policy separately or as an add-on (also called a rideshare endorsement) to their existing personal auto policy.
How It Works
Ride-hailing services and insurance companies have divided coverage periods into distinct categories. Each category is a different stage of rideshare driving and, accordingly, has differing insurance coverage options available.
Period 0: You can also refer to this period as simply “Offline.” It is when you are not using a ridesharing app and thus not engaging in commerce. At this point, your activities in your vehicle are still personal, so your private auto insurance is still active.
Period 1: In this period, you have the app on for a ridesharing company like Uber or Lyft, and you are awaiting a ride request from a customer. In most cases, your personal auto insurance policy ceases to be active at this point.
Instead, Uber or Lyft’s insurance is likely all that protects you. This coverage is liability only, meaning it applies to damage to other vehicles and passengers. Your personal policy, including comprehensive and collision coverage, no longer protects you or your car.
During this period, you may be able to utilize a rideshare endorsement to extend your personal coverage.
Period 2: This category is for the time when your app is open, you have accepted a ride request, and are en route to pick up your passenger. Here, only the ride-hailing company’s insurance covers you. You no longer have the protection of your personal auto policy or the rideshare add-on.
Period 3: Finally, Period 3 is when you have the app open, have picked up your passenger, and are on the way to the destination. The insurance coverage situation is the same as in Period 2.
Once you have dropped off your passenger, you will be back to Period 1 if you leave your app open. If you turn it off, you will return to Period 0, and your personal auto policy will be active once more.
Coverage Through Uber and Lyft
In Period 2 and Period 3, both Uber and Lyft provide Contingent Collision and Comprehensive coverage. That means that the offer of collision and comprehensive insurance depends on whether or not you have the same coverage already on your personal policy. If you do not maintain this kind of coverage outside of ridesharing, then neither Uber nor Lyft will extend it to you. The minimum each company provides is 50/100/25, which breaks down to be:
– $50,000 per person for bodily injury
– $100,000 per accident for bodily injury
– $25,000 per accident for property damage
If state limits exceed the minimums set by Lyft or Uber, these companies will raise their amounts to match. However, they will not lower their limits if those of the state fall below Uber’s or Lyft’s in any category. Additionally, in Periods 2 and 3, Uber and Lyft provide $1 million in liability coverage and another $1 million in UIM/UM.
Why Get Rideshare Insurance?
Be Financially Protected At All Times
Ride-hailing insurance and rideshare endorsements specifically exist to ensure you have coverage continuously, even as you transition back and forth between personal and business uses of your vehicle. Without it, you could find yourself paying expensive out-of-pocket costs for injuries or vehicle damage should you get in an accident during Period 1 (when you are the least insured).
Close the TNC Deductible Gap
Rideshare companies like Uber and Lyft are also known as TNCs (Transportation Network Companies). TNCs have their own deductibles that you must meet before their commercial insurance kicks in to cover costs in an accident. The deductibles set by Uber or Lyft tend to be high compared to typical deductibles for the average personal auto policy.
The deductible offered by Uber for collision and comprehensive claims is $1,000. Lyft sets this deductible at $2,500.
It is possible to get either a standalone ride-hailing insurance policy or, more commonly, an endorsement that has the added benefit of helping you meet these higher deductibles. For example, if you have personal auto insurance with a $500 deductible, your rideshare endorsement may pay the difference between the $500 and any additional amount the TNC stipulates. Thus, even if Uber requires $1,000, you still only pay $500 if your rideshare endorsement is in effect at the time of the accident.
How Much Does It Cost?
It is challenging to pin down an accurate average price for ride-hailing insurance. The cost varies significantly depending on what state you are driving in and which service employs you. Your premium rates on your personal policy are, of course, determined by several factors, including your driving history, claims history, the age of your car, etc.
Whether you get a completely separate policy to cover ridesharing or only add on an endorsement also makes a difference. If your insurance company offers endorsement policies, that will likely be your cheapest option.
How to Get Ride-Hailing Insurance?
Buying ride-hailing insurance can be as simple as logging onto your current auto insurance company’s website and completing forms through their site or online portal. On the other hand, some insurance companies still require you to call and speak to an agent first.
If you speak with an agent, be clear that you are engaged in ridesharing work. They should give you a quote based on your personal history and location. You may want to take the opportunity to shop around and compare quotes from any other providers in your area.
What Are the Requirements in California?
While most states do not require ride-hailing insurance, California law does mandate that TNC drivers must have insurance at all times while they are using a ridesharing app. Drivers, therefore, may need to purchase an add-on, a separate ride-hailing policy, or a commercial policy to comply. In some cases, the coverage provided by Uber or Lyft will be sufficient to meet California standards. Even so, drivers will not receive as many benefits with Uber’s or Lyft’s liability insurance as they would with additional coverage.
Period 0 Minimum Requirements
– $15,000 bodily injury coverage per person
– $30,000 bodily injury coverage per accident
– $5,000 property damage coverage per accident
Period 1 Minimum Requirements
– $50,000 bodily injury coverage per person
– $100,000 bodily injury coverage per accident
– $25,000 property damage coverage per accident
Periods 2 and 3 Minimum Requirements
– TNC must carry at least $1 million in liability insurance
If you are not sure whether the coverage you will receive from your employer is sufficient to meet California’s standards, reach out to the TNC in question and ask if you will need to buy additional insurance or not.
What to Do if You Are in an Accident While Ridesharing?
If someone is injured, the first thing you should do is seek medical help (such as by calling 911). Even if there is no apparent medical emergency, your first step should still be to alert the police. If the TNC you work for has a sensible protocol for your situation, consider following the steps that they recommend as well.
Beyond protecting human life and safety, which is paramount, contacting local authorities provides you with records that may eventually help you file an insurance claim. Be sure to get a copy of the police report and write down crucial details like names, license plate numbers, times, and anything else you might need to recall later.
Finally, you will want to get an attorney experienced with ridesharing claims. Do this as soon as possible so that your attorney can begin working on potential claims right away. In California, there is a statute of limitations time-frame in which you must file your claims after ridesharing accidents. If you are late, you may lose your right to full compensation or any compensation whatsoever.
Why Do You Need an Experienced Attorney After a Ridesharing Accident?
While Uber and Lyft carry insurance that should be a tremendous benefit to you in case of an accident, successfully securing a claim approval can be an uphill battle. That is because these large companies have expert legal teams whose purpose is to minimize your claim or prevent a settlement.
The silver lining of the situation is this: multiple overlapping insurance policies mean that, in a ridesharing accident, you have ample opportunities to file a claim and receive generous compensation. But to successfully combat resistance from Uber or Lyft, you will also need expert representation on your side. The right legal team will be knowledgeable in all things related to ridesharing accidents and will help you rapidly receive all the financial benefits you can.