Insurance answers for gig drivers

When it comes to auto insurance for rideshare driving, the most important thing you, as a rideshare driver, need to know is that personal insurance policies do not cover you or your vehicle if you use the vehicle for any kind of commercial purpose whatsoever. And driving for Uber and Lyft counts as a commercial purpose. So, while it is required that you have personal auto insurance in order to drive for Uber and Lyft, that insurance will not cover any claims that may arise while you’re driving for Uber and Lyft.

 What Uber and Lyft’s insurance covers

As luck would have it, Uber and Lyft both provide an insurance policy that does cover you while you’re driving for them. However, it doesn’t cover everything. To be fully covered, you’re going to need something more.

First, let’s take a look at what Uber’s insurance does cover. There are three phases Uber covers for drivers (and Lyft’s insurance is very similar).

• Phase 1: Sign-In — This is the period when you have logged into the app to let Uber know you’re available for trip requests, but you have not yet received a trip request. You, as a driver, are covered for liability claims in varying amounts, depending on your state. But whatever the amount is for you, it’s the minimum amount allowed by law. Typically for injuries, it is $50,000 in bodily injury per person up to a maximum of $100,000 in bodily injury per accident. There is $25,000 in coverage for property damage done to others’ property (not yours) per accident.
• Phase 2 (Acceptance) and Phase 3 (Transporting a Passenger(s)) — This coverage kicks in from the moment you accept a trip request from a passenger and it concludes when you drop the passenger off and tap the app to signal to Uber that the trip is complete. These two phases are covered for higher amounts. Generally in this phase, you have $1 million in liability coverage and at least $250,000 for injuries caused by uninsured or underinsured drivers. As long as you have physical-damage coverage (also known as “comprehensive” insurance), your property, namely your vehicle, will be covered by Uber — if an accident occurs while you’re on the way to pick up a passenger or while you have them in the car. This comprehensive vehicle insurance comes with a $1,000 deductible.

Am I covered through my own insurance?

There are a few things to note here. First, in Phase 1, Uber’s insurance only protects you from the financial liability you would incur if you’re involved in an accident and you injure someone or you do damage to someone else’s property. The Phase 1 insurance does not protect you for any injuries or damages to your own property that you may sustain. You will need your own insurance for that.

The second thing to note is that in Phases 2 and 3, your property is only covered if you have comprehensive insurance from your own personal insurance company. If you don’t have comprehensive insurance, then Uber’s insurance will not cover any damage to your property.

This is a little tricky because a lot of people don’t realize that there are two separate parts to auto insurance. There is liability insurance, which covers any damage you may do to others and there is comprehensive insurance that covers any damage others may do to your property, like your car.

And keep in mind that just because you have auto insurance that doesn’t necessarily mean that you have comprehensive insurance. Everyone is required by state law to have liability insurance. But most people are not required by law to have comprehensive coverage. If you purchased the absolute cheapest insurance your insurance company would allow you to buy, there is a chance you may not have comprehensive and you should check that out before engaging in rideshare driving.

What kind of coverage do I need to drive for Uber and Lyft?

There is one last thing you should be aware of, and this is probably the most important. If you have an accident while driving for Uber or Lyft, you will be required by Uber and Lyft to report it first to your own insurance company. It is expected that your insurance company will deny the claim since you were doing rideshare driving, but Uber and Lyft must have this denial before they will proceed with their coverage. In other words, they will not accept your claim until your insurer first denies it.

This is something that has gotten many a rideshare driver into big trouble. Because under a standard auto insurance policy you will not be covered if you’re using your vehicle for a commercial activity, such as driving passengers for-hire. Therefore, if you submit a claim to them, they will not only deny your claim but they will cancel your insurance policy at the same time! Since you definitely don’t want that to happen, you will have to look into getting a rideshare endorsement on your policy. This is extra insurance, that will cost you more, but it will allow your insurance company to cover you when you’re doing rideshare driving.

However, this is where you may run into a problem, because not all auto insurers offer rideshare endorsements at this time. Many more do than did a few years ago, but, you may have to switch to a different insurer to get it. The good news is more insurers are offering it all the time as rideshare driving becomes more mainstream. The bad news is about 40% of rideshare drivers today are paying a minimum of $100 per month for it, on top of their regular insurance premium. But shop around because some drivers are paying as little as $20-$30 in addition to their regular insurance for the rideshare endorsement.

The last thing to note is that liability insurance only protects you from being held financially responsible for paying for injuries to other people or for damage to their property. Liability insurance does not protect you financially for any injuries you may sustain, nor does it cover any damage done to your property, such as your car. So, when you’re in Phase 1 — waiting for a ride request — the only way you and your car can be covered is by having a rideshare endorsement from your personal insurance company. 

To be fully covered and protected while doing rideshare driving, you’ll need to have both liability and comprehensive insurance from your own personal insurance company. You will also need a rideshare endorsement so your insurance company won’t cancel you in the event of an accident while you’re logged into a rideshare app. If you have all that, then you should have no trouble at all getting your bills paid in case you’re ever involved in an accident.

Related Articles: