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Car Insurance

Uber and Lyft: Car Insurance and Rideshare Coverages

Rideshare drivers have three options for auto insurance that would protect both them and their passengers: personal, commercial, or policies tailored specifically to ride sharing drivers.

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If you’ve ever thought about becoming a driver for Uber or Lyft, you may be wondering a few things as you fill out your application: how much will I get paid, how many days a week must I work, can I stop at Chipotle while en route to my next passenger? And while all of these questions are valuable (even your burrito inquiries), you should be wondering what kind of insurance coverage you as a driver need in the event of a rideshare accident. Will this convenient alternative to driving your own vehicle to earn income become an inconvenient battle with an insurance provider?

Because rideshare companies blur the line between personal and commercial vehicles, their insurance coverage can also be unclear for potential or current drivers and their passengers. Traditional commercial vehicles, such as taxis and liveries, and their drivers must obtain a Commercial Driver’s License (CDL) and a commercial insurance policy in accordance with their transportation company and state requirement laws. However, a CDL isn’t required of an UberX or Lyft driver. The only things required of these private charioteers is a car that is a model year 2000 or newer, a background check, a personal license and registration, minimum age of 21, and of course, personal car insurance.

Uber and Lyft classify their vehicles as personal because they don’t consider their drivers to be employees, but rather independent contractors--you might have heard about multiple, global protests concerning this issue. However, Uber does maintain commercial insurance and CDL requirements specifically for their BLACK, SUV, and TAXI services. Therefore, individual drivers must make a decision regarding their auto insurance coverage while keeping in mind that both Uber and Lyft offer some kind of supplementary coverage while in use of their mobile app that will pay for losses not covered under the driver’s personal policy.

What kind of car insurance coverage does Uber and Lyft offer?

Uber, for example, offers additional coverage such as liability, uninsured motorist, collision, comprehensive, and personal injury protection to their on-the-clock drivers and their accompanying riders. Both Uber and Lyft have broken down this added coverage into stages of the pickup process which include offline, available, en route, and on trip. The tables below offers a detailed outline of both Uber and Lyft’s coverages for these specific stages.

uber car insurance chart
lyft car insurance chart

For drivers and passengers alike, it’s comforting to know that these companies provide some type of extra coverage in the event of an accident. However, is that extra coverage combined with the driver’s private policy enough? If you’re a rideshare driver your insurance shouldn’t only cover you, but your passengers as well. Afterall, they’re instinctively trusting you to get them from pickup to destination as efficiently and safely as possible. In order to accomplish this, drivers have three options for auto insurance: personal, commercial, or policies tailored specifically to ride sharing drivers.

Personal auto insurance in relation to Uber and Lyft

Rideshare companies claim that with their supplementary coverage, your personal policy will be enough when you work as a driver. However, insurance providers and state regulators disagree. How can the policy your purchased for yourself as an individual now be enough to cover a seemingly commercial vehicle? Taking a position with Uber or Lyft also runs the risk of your insurance provider denying a claim or even dropping you as a customer once they discover you’ve been hiring out of your car. Despite all of these negative possibilities, ridesharing companies offer little advice to their drivers about coverage levels beyond state minimum and so, drivers are left uninformed and underinsured.

It’s recommended that you get the most insurance you can afford so that if an accident exceeds both your and the rideshare company’s supplementary coverage, you won’t have to pay out with your property or financial savings. Finding the most affordable insurance with the most amount of coverage can be a long and daunting task when you’re eager to start a new job. Save the time you would spend manually comparing policy prices and coverage yourself by using a free quote comparison tool, such as Insurify. Insurify allows you to completely customize your coverage so you know you’ll be getting the most for you and your customers at an affordable rate. You’ll be making money on the road in no time.

Commercial auto insurance in relation to Uber and Lyft

Another option for potential rideshare drivers would be commercial insurance. Typically required for taxis and other company driving services, some states and cities require ride hailing services to also carry this kind of insurance. You could be precautious and purchase this policy in a state that doesn’t require it, but then you would take on the extra expenses of receiving a CDL and the average annual cost of $5,000 to $7,000 for a commercial policy.

New auto insurance policies tailored to rideshare drivers

A final option, for a limited few, is a policy tailored specifically for rideshare drivers. Currently, a few insurance providers are giving customers this option in only twelve states throughout the U.S. Use the map below to see if your state is included and if so, which providers cover Uber, Lyft, or any ride hailing service.

Technology, such as Uber’s ride hailing applications and Insurify’s artificial intelligence quote processor, is making our time spent in vehicles much more timely and user friendly. However, the auto insurance industry needs to keep pace and compliance with these emerging technologies in order to ensure driving stays not only convenient, but secure.