September 22, 2022

What Rideshare Drivers Need to Know About Car Insurance

Uber’s and Lyft’s rideshare coverage doesn’t cover as much as you think.

Remember that recurring dream you had growing up? You know the one: You’re late for a school presentation that counts for half of your grade. When you arrive, you realize you don’t have your notes. Oh yeah, and you’re not wearing any clothes.

Driving for a rideshare company without rideshare coverage is like that dream. No one wants to get caught unprepared or underdressed when it matters most. Rideshare companies like Uber and Lyft provide some coverage for their drivers, but you can protect your passengers and yourself by selecting a rideshare insurance policy to fill in the gaps.

Why Do Rideshare Drivers Need Additional Insurance Coverage?

Rideshare companies offer insurance coverage for drivers when you’ve accepted a ride or are transporting passengers1. However, they provide limited insurance coverage if you’re waiting for a ride request.

The period while the app is on and you’re waiting for a request is often called Period 1. During Period 1, rideshare companies only provide minimal insurance coverage. At the same time, your personal car insurance may not cover accidents during Period 1 either2. If you get into a car accident while the app is on, you are technically a contractor for Uber or Lyft, so your personal insurance company won’t pay any claims.

FYI

You must tell your insurance company that you use your car for commercial purposes. They could cancel your policy if you don’t disclose that you drive for Uber or Lyft.

What Coverage Do Rideshare Companies Provide?

Before we break down rideshare company insurance, let’s define the steps of the ridesharing process as follows:

  • Period 1: The app is on and you’re waiting for a request.
  • Period 2: You’ve accepted a ride request and are driving to the pickup location.
  • Period 3: There are passengers in your car.3

Most states require rideshare companies to provide insurance to their drivers. Understand how much coverage you have before you sign up in case you need to fill in the gaps with a rideshare endorsement, rideshare policy, or commercial policy. Here is a rundown of the driver coverage that Uber and Lyft offer:

Coverage Uber, Period 1 Lyft, Period 1 Uber, Period 2 Lyft, Period 2 Uber, Period 3 Lyft, Period 3
Bodily injury liability $75,000 per person, $150,000 per accident $50,000 per person, $100,000 per accident $1,250,000 total third-party coverage for liability $1,000,000 total third-party liability $1,250,000 total third-party liability $1,000,000 total third-party liability
Property damage liability $25,000 $25,000 $1,250,000 total third-party liability $1,000,000 total third-party liability $1,250,000 total third-party liability $1,000,000 total third-party liability
Uninsured/underinsured motorist liability $25,000 per person, $50,000 per accident None $1,250,000 $1,000,000 total third-party liability $1,250,000 $1,000,000 total third-party liability
Death insurance $50,000 per person, $100,000 per accident None None None None None
Personal injury protection (medical expenses coverage) $50,000 per person None $50,000 per person None $50,000 per person None
Comprehensive and collision coverage None None Actual cash value of car, $2,500 deductible Actual cash value of car, $2,500 deductible Actual cash value of car, $2,500 deductible Actual cash value of car, $2,500 deductible

And here are some helpful car insurance definitions.

  • Liability insurance: Liability insurance covers the cost of another party’s property damages and bodily injuries if you’re found to be at fault after an accident.
  • Uninsured/underinsured motorist coverage: Uninsured/underinsured motorist coverage protects you if the at-fault driver doesn’t have enough liability coverage, or doesn’t have any coverage at all.
  • Comprehensive insurance: Comprehensive coverage is optional and pays for damages to your car from incidents other than collisions, such as weather-related damages, theft, and vandalism.
  • Collision insurance: Collision coverage is an optional coverage that pays to repair your car if it gets damaged in an accident, regardless of who caused the accident.

How to Add Rideshare Insurance to Your Policy

There are reasons to add rideshare insurance to your existing car insurance policy. Peace of mind, yes, but Uber and Lyft also require you to have car insurance to drive commercially. However, you generally can’t get regular commercial insurance on a car you drive for personal reasons. You’ll need to add rideshare insurance to your existing personal auto insurance policy.

There are two ways to add rideshare insurance to your car insurance policy. The most common way is to add a rideshare endorsement to your policy. Also called a ride-hailing insurance endorsement, the rideshare endorsement fills in the gaps between the transportation network company (TNC) you work for and your personal auto insurance policy. Your rideshare endorsement will include all of the coverages on your personal policy, including collision and comprehensive insurance.

Another option some insurance companies offer is to convert your existing personal plan into a hybrid personal and rideshare insurance policy. This option is usually available if the company does not offer a rideshare endorsement in your state.

In most areas, a personal insurance policy is enough to qualify for the rideshare company’s insurance coverage; however, in New York City, you may need commercial car insurance or a commercial driver’s license to drive for Uber or Lyft4. Rideshare companies determine driver qualifications, so check out the requirements to drive for Uber5 or Lyft6 in your state.

Which Insurance Companies Offer Rideshare Insurance?

With millions of Uber and Lyft drivers working today, more and more auto insurance companies are offering rideshare insurance7. Below is a rundown of the top rideshare policies available.

GEICO

GEICO’s hybrid rideshare insurance covers you for all three periods and whenever you drive your vehicle for personal use. Coverage varies by state, so contact an agent in your area to determine eligibility.

Allstate

Allstate auto insurance offers a Ride for Hire policy endorsement. In Period 1, Allstate’s endorsement coverage kicks in after your personal policy and the TNC policy. In Periods 2 and 3, when the TNC policy likely applies, Allstate will provide deductible gap coverage for damages to your vehicle of up to $2,5008.

State Farm

State Farm’s rideshare endorsement, also known as Transportation Network Company Driver Coverage, covers you throughout all three periods. In Period 1, coverage extends from your auto policy and may include liability coverage, physical damage coverage, and emergency roadside service. In Periods 2 and 3, the same coverage minus liability to others may apply. Again, the rideshare insurance coverage available to you depends on your state9.

Progressive

Add rideshare coverage to your existing policy so you’re protected whether or not you’re working. Progressive requires you to add rideshare insurance to your personal auto policy. During Period 1, Progressive provides comprehensive, collision, uninsured/underinsured motorist, personal injury protection, rental car reimbursement, and roadside assistance. During Periods 2 and 3, when the TNC’s policy takes over, Progressive will still provide rental car reimbursement and roadside assistance10.

How Much Is Rideshare Insurance?

The cost of your auto insurance depends on several factors. Adding coverage, including a rideshare endorsement, will impact the cost of your policy in most cases. Expect your premium to increase by between $6 and $30 per month if you add a rideshare endorsement to your existing policy.

Company Premium Deductible
GEICO Varies by state Varies by state
Allstate $10-$20 dollars per month $2,500 in deductible gap coverage
State Farm 15%-20% No change
Progressive Depends on vehicle, state, driving history, and other factors. Will reimburse you for the difference between TNC’s deductible and the deductible on your personal policy

Citations

  1. Sharing Economy. NAIC. (2022).
    https://content.naic.org/consumer/sharing-economy.htm

  2. Ride-sharing and insurance: Q&A. III. (2022).
    https://www.iii.org/article/ride-sharing-and-insurance-qa

  3. What are the Three Rideshare Periods? Kwaltler Manus LLC. (2022).
    https://www.kminjurylawyers.com/firm-news/blog/2019/march/what-are-the-three-rideshare-periods-/

  4. FAQ for TNC Drivers. New York State DMV. (2022).
    https://dmv.ny.gov/more-info/faq-tnc-drivers

  5. Flexible driving opportunities with Uber. Uber. (2022).
    https://www.uber.com/us/en/drive/

  6. Learn what you need to drive with Lyft. Lyft. (2022).
    https://www.lyft.com/driver-application-requirements

  7. How Many Uber Drivers Are There in 2022? Ride Share Guy. (2022).
    https://therideshareguy.com/how-many-uber-drivers-are-there/

  8. Ride sharing? Be protected. Allstate. (2022).
    https://www.allstate.com/auto-insurance/ride-for-hire

  9. The ins and outs of rideshare driver coverage. State Farm. (2022).
    https://www.statefarm.com/simple-insights/auto-and-vehicles/the-ins-and-outs-of-rideshare-driver-coverage

  10. Rideshare Insurance. Progressive. (2022).
    https://www.progressive.com/auto/insurance-coverages/rideshare/