If you drive for a rideshare company like Uber or Lyft, or an on-demand delivery company (Amazon, Grubhub, etc.), you should consider Rideshare Insurance. Rideshare insurance is a kind of insurance coverage, usually purchased to supplement a personal auto policy. When driving for a rideshare company, drivers may be left uninsured during particular periods of their drive.
The rideshare industry has become a successful mean for anyone with a car – really, anyone! – to earn additional income or become self-employed. In fact, research shows that full-time drivers can earn around $36,000 per year. Though these companies provide drivers with some insurance coverage, many drivers don’t realize that they are not fully covered.
Why Lyft and Uber drivers need rideshare insurance?
Your personal car insurance is unlikely to cover any accidents that occur during your ‘Uber’ driving hours. If you can’t get rideshare coverage, you’ll need a commercial insurance policy to have full insurance. (This is also true if you drive to other travel-sharing companies or application-based delivery services.)
Rideshare companies arrange the duration of a ride into three periods (stages):
- Period 0: The application is disabled. The personal auto policy covers you.
- Period 1: The app is enabled, and the driver is waiting for a request. A personal policy without ridesharing coverage does not cover you since Uber, and Lyft insurance is limited to liability coverage.
- Period 2: You have accepted a request, and you are on your way to pick up the passenger. Lyft insurance and Uber insurance provide full coverage.
- Period 3: You have passengers in the car. You’re covered through Uber insurance and Lyft insurance.
Ridesharing isn’t offered where I live
Rideshare insurance policies are not available everywhere. These plans have higher liability limits than a typical policy – and higher matching prices. Policies with ridesharing coverage can cost up to $15 more a month. Coverage offered by Ridesharing companies is only for specific periods. It doesn’t give full coverage for the entire duration of the drive. As a result, a gap in coverage during period 1 may leave drivers vulnerable. Besides, a personal auto insurance policy does not provide the coverage needed to protect drivers in these coverage gaps.
While ridesharing insurance does bridge the gap where drivers may be unprotected, there are other benefits to purchasing one. Drivers can amortize these expenses when they file their taxes, recovering the cost of any property damaged in an accident, among other benefits.
For those considering a career or part-time job as a rideshare driver, having full coverage through an insurance policy is the key to avoiding costly damage in the event of an accident. Although ridesharing companies like Uber and Lyft offer their own insurance, these policies do not fully cover the driver at all times.
A separate ridesharing insurance policy provides drivers with the necessary protection from the moment they start driving to the moment they drop off their last passengers.