Do You Need Rideshare Insurance?

April 2019
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The rideshare economy is booming. More than half (53%) of all people in the United States have used ridesharing apps to get from one place to another. Rideshare drivers are cashing in on this transportation trend with U.S. drivers earning an average $20/ hour.

Whether you’re looking to make a little extra money driving part-time as a side gig, or want to turn rideshare driving into a full-time job, you’re going to need the right insurance in place before you start shuttling passengers around.

Here’s what you’ll need to know about insurance if you want to start earning money as a rideshare driver:

Both Uber and Lyft, the two largest rideshare operators in the US, require that you have your own personal insurance on your car before you can drive for them.

But personal insurance alone won’t cover you if you’re a rideshare driver.

Let’s take a look at the difference between personal and rideshare insurance.

Personal Auto Insurance

In nearly every state, you’re required by law to have a minimum amount of personal auto insurance in place if you’re going to drive a car.

Liability insurance covers third-party injuries and property damage. This is the coverage that’s typically mandatory if you’re driving a car, because it’s designed to protect other people and their property.

Other types of personal auto coverage, such as comprehensive and collision coverage, are designed to protect your vehicle in the event of an accident.

At the very minimum, you’ll want to carry the required amount of liability insurance mandated by your state and by rideshare companies. But since you’ll be using your vehicle to earn money, it also makes sense to protect your investment with enough comprehensive and/ or collision coverage to ensure you can get your car back and up running in the event of an accident.

Your personal auto insurance covers you when you’re driving your car for personal reasons, however, it won’t cover you while you’re driving for a rideshare company.

Any time you get into your car and open the rideshare app, your vehicle is being used for a business purpose. And that means your personal insurance isn’t covering you. If you were to get into an accident, your personal insurance claim would be denied.

Even worse, your personal policy could even be cancelled.

That’s why you’ll need rideshare coverage, as well.

Rideshare Insurance

Rideshare insurance has been designed with you - and the other 1.3 million (estimated) U.S. rideshare drivers - in mind.

Traditionally, if you were using your vehicle for business purposes, you would need commercial auto coverage.

Rideshare insurance is a specialized form of coverage that provides a nice balance between personal and commercial auto insurance, and it tends to be less expensive on average than a commercial policy.

Different insurers offer different types of rideshare coverages to fit your needs:

Some companies offer rideshare endorsements that can extend your personal auto insurance coverage to include the time you spend logged into your app up to the time you accept a rider or get them to their destination. This type of coverage could cost you as little as $15 - $20 per year.

Other companies offer uniform or hybrid policies that replace your personal auto coverage with a policy that covers you whether you’re using your car for personal use or ridesharing. This type of coverage should cost you less than a traditional commercial auto policy.

Some policies will be a better fit for part-time or occasional drivers, while others may be better for full-time drivers. Your insurance agent can help you find the best coverage for your driving needs.

Do Rideshare Companies Provide Insurance?

Rideshare companies like Uber and Lyft do provide coverage for their drivers. The coverage limits can change depending on your activity.

When you’re driving your car for personal use, you’re covered by your own personal insurance policy.

When you switch on the rideshare app, you’ve started working. At this point, Uber and Lyft offer minimum liability coverage for their drivers, which typically looks like:

  • $25,000/ property
  • $50,000/ person
  • $100,000/ incident

These coverage limits often increase if you’re on your way to pickup or dropoff a rider.

Rideshare companies may offer you additional comprehensive or collision coverage, but typically only do so if you already have these coverages in place on your personal policy.

When you have dedicated rideshare insurance, it helps fill the gaps left between your personal policy and an Uber or Lyft policy. Plus, it gives you the opportunity to increase coverage limits, for even more peace of mind.

Bottom Line

If you want to capitalize on the growing popularity of the rideshare economy, the money is there for the making. But, like any business venture, you need to adequately protect yourself with the right insurance.

The moment you turn on a rideshare app, your personal auto coverage stops.

Rideshare insurance is an affordable way to be sure your investment (vehicle) is protected while you get out there and hustle. It’s specialized coverage that’s designed specifically with rideshare drivers in mind. And it allows you to customize your coverage or policy limits so you’re not relying on the policy provided by the rideshare companies - giving you more choice and greater power of protection while you’re behind the wheel.

Don’t drive an inch until you’ve talked to your trusted insurance provider about what coverages will work best for you and your rideshare goals.

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