Learn which auto insurance policies will cover you if you supplement your income as a driver

Key Takeaways

  • Your personal auto insurance policy probably won’t cover damages or injury that occur while driving for a rideshare company or a delivery-based app.
  • Uber and Lyft only offer minimal coverage for drivers while the app is on and they’re waiting for a ride request.
  • Rideshare insurance helps fill in the coverage gaps between your personal auto insurance and the insurance offered by Uber and Lyft. 
  • Rideshare insurance is usually inexpensive. 
  • If you can’t get rideshare insurance through your current auto insurer, you may want to consider a commercial auto insurance policy.

These days, many people supplement their income by driving for Lyft, Uber, and other rideshare or delivery companies. But along with earning some extra cash, working as a rideshare driver means there are a few things you need to know about auto insurance. From personal auto insurance to commercial auto insurance to rideshare company coverage, there are many types of policies, and they all cover different scenarios. It’s important to understand what you’re getting with each policy and which ones you’ll need to make sure you’ve got adequate coverage.

Are you covered under Uber, Lyft, and other companies’ insurance policies?

While Lyft and Uber do have insurance policies, there may be gaps in coverage for drivers using their personal cars. Both Uber and Lyft have a tiered insurance policy, and you’ll want to understand what’s covered and when that coverage kicks in.

Your personal auto insurance probably won’t cover incidents that occur while driving for a rideshare or delivery app. It’s not a good idea to rely on personal insurance either because your insurer may drop your policy altogether if they find out you’re using your car to make money and you haven’t disclosed that.

Uber and Lyft insurance policies, explained

Uber and Lyft have similar insurance policies, except for the deductible amount. The deductible is the amount of money the driver has to pay before the insurance policy kicks in. Uber’s deductible is $1,000, and Lyft’s deductible is $2,500.

When the app is off, drivers are covered by their own auto insurance policy. When the app is turned on, and you’re waiting for a ride request, both Uber and Lyft offer only some coverage. When you’ve accepted a ride request, or you’ve picked up a passenger, that’s when you’ll have the maximum coverage from the company’s insurance policy. You can think of the policy as having two different phases.

When the app is on and you’re waiting for a ride request

During this first phase, Uber and Lyft only offer liability insurance, meaning the insurance will cover certain instances of damage to other people or another person’s property, but it will not cover damages to you or your car.

Third-party liability insurance during this phase covers:

  • Up to $50,000 bodily injury per person
  • Up to $100,000 bodily injury per accident
  • Up to $25,000 property damage per accident

When you’re on the way to pick up a passenger or you already have a passenger in the car

When you’ve accepted a ride request and you’re on your way to pick up a passenger, you’ll have the liability insurance as well as comprehensive and collision insurance. 

What’s covered in this phase:

  • Up to $1 million third-party liability
  • Uninsured/underinsured motorist bodily injury (coverage varies by state)
  • Contingent comprehensive and collisions up to actual cash value of the car (after deductible)

Rideshare insurance and how it can help

Although Uber and Lyft extend insurance to their drivers, the insurance policy does not provide adequate coverage for drivers while the app is on and a driver is waiting to accept a ride request. If you were to get into an auto accident during this time, you’d be responsible for covering your medical bills and damages to your car. And, as mentioned above, your personal auto insurance isn’t likely to cover these costs and may drop your policy if you haven’t disclosed you’re a rideshare driver.

Rideshare insurance can help fill in the gaps in coverage. But it’s often an add-on or supplemental policy rather than a stand-alone policy.

How to get rideshare insurance

Start by contacting your current auto insurance provider. Let them know you’re driving for a rideshare company and inquire if they offer rideshare insurance or another form of supplemental insurance.

Amid the COVID-19 pandemic, some insurers are extending coverage to include damages to the driver’s car when delivering food, medicine, or other essentials for a delivery company. It may turn out that you’ve already got some form of coverage, at least temporarily.

If your current insurer does not offer rideshare insurance, ask about commercial auto insurance. While a commercial auto insurance policy isn’t usually necessary for drivers working with Lyft and Uber part-time, it may be your only option if your current insurer doesn’t offer rideshare insurance. You may want to get a few different quotes to compare costs.

Cost of rideshare insurance

The cost of rideshare insurance will vary by provider, and not all providers list their rates publicly. But on average, you can expect rideshare insurance to cost anywhere between $6 and $30 per month.

Rideshare company insurance policies, though generous, can still leave drivers vulnerable and without proper coverage in all situations. If you’ve got a side gig as a driver, be sure to alert your current auto insurer and take steps to get the right coverage. After all, you’ll want to ensure you can spend your extra income as you planned rather than on damages to you or your car from an accident not covered by insurance.

Whether you chose rideshare insurance or commercial auto insurance, having the right coverage can give you peace of mind as a rideshare or delivery driver. At Avante Insurance, we’ve helped countless drivers get appropriate auto insurance coverage, including those who drive for rideshare and delivery apps. If you need help with auto insurance, contact us to discuss your options or get a free quote. 

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.