How Rideshare Insurance Works
Drivers often assume that if you have a car, you can just start offering rides and your personal auto insurance policy will cover it. In truth, your personal policy only covers you part of the time. The commercial policy from the rideshare company—often referred to as Uber insurance or Lyft insurance—only covers you for part of the ride, leaving dangerous coverage gaps in between, where you may only have minimum liability coverage protecting you.
Rideshare driving is typically divided into “periods” that have different requirements and responsibilities for insurance coverage. Here’s what you need to know about what insurance to carry for each period.
Period 0: Offline
If you’re out driving for yourself in your personal vehicle and you’re not logged into a rideshare app, your personal insurance is responsible for covering any damages you cause if you get into an at-fault accident. Your rideshare insurance doesn’t apply in this situation.
Period 1: Logged In, Waiting for a Passenger
The period when you’re logged in but still waiting for a passenger request is a common coverage gap that can cause a lot of issues for you if you’re involved in an accident. That’s because your personal insurance considers you as being on the clock for a rideshare company, while the rideshare company may not cover you because you’re not transporting (or on your way to transport) a passenger.
Some rideshare companies provide basic liability insurance to cover this gap period, but it often doesn’t cover damage to the driver or the driver’s car. It will only cover medical bills or property damage that you caused to other people involved in the accident.
New Jersey law requires either the driver or rideshare company to maintain primary car insurance that provides this amount of coverage for this period:
Primary automobile liability insurance with coverage limits of at least $50,000 for death or bodily injury per person, $100,000 for death or bodily injury per incident, and $25,000 for property damage
Primary personal injury protection benefits
Uninsured and underinsured motorist coverage
Period 2: On Your Way to Transport a Passenger
When you’ve accepted a passenger’s ride request and you’re en route to pick them up, you should be able to lean on full coverage from your rideshare company if you’re involved in an accident. This usually includes:
Third-party liability coverage: This part of your policy covers bodily injuries or damages that you cause to your riders, other drivers, pedestrians, or property.
Uninsured or underinsured motorist coverage: You and anyone in your vehicle are protected in case an uninsured or underinsured driver causes an accident and you are involved in it.
Contingent collision and comprehensive coverage: Do you have comprehensive and collision coverage on your personal insurance policy? If so, both Uber and Lyft will match that coverage while you’re driving for them. Both companies require you to meet deductibles before this coverage kicks in.
When a driver is providing a ride, New Jersey requires minimum policy limits of coverage that include:
Primary automobile liability insurance with at least $1.5 million for death, bodily injury, and property damage
Primary automobile insurance for medical payments that covers at least $10,000 per person per incident
At least $1.5 million in uninsured and underinsured motorist coverage
Period 3: Providing the Ride
You should have the same coverage you have during period 2. Both Uber and Lyft provide liability, uninsured/underinsured motorist, and comprehensive and collision coverage.
Not carrying any rideshare insurance can be risky because your personal auto policy won’t cover your claims while you’re on the clock for a rideshare company. In fact, if you don’t report your rideshare activities, you’re at risk of losing your personal car insurance altogether.
Fortunately, there are many options out there for either rideshare insurance providers or a rideshare endorsement as an add-on to your personal insurance. For example, popular New Jersey insurer Plymouth Rock offers two rideshare endorsements; the basic version covers you while you’re logged in and waiting for a ride request, while the enhanced version adds on excess coverage for the time you’re driving to pick up a matched passenger, stopping to pick them up, and driving to the destination.
See More: Best Companies for Rideshare Insurance