Rideshare Insurance Requirements

Millions of drivers around the world have joined the rideshare community. Uber alone has more than 3.9 million drivers worldwide. The industry is booming and expanding beyond ride-hailing services. On-demand delivery services, such as Instacart, Grubhub and Uber Eats, also give drivers a chance to control their income.

With so many drivers joining the rideshare movement, insurance has become a confusing topic. Do you need extra coverage? Won’t the company’s insurance cover an accident? Many drivers have questions about how insurance works and wonder whether they need rideshare insurance.

Let’s take a closer look at who needs rideshare insurance and which companies offer it.

Do You Need Rideshare Insurance?

If you drive for a rideshare company or an on-demand delivery company, like Uber, Lyft, Grubhub or Instacart, then you need rideshare insurance.

It’s easy to assume that your personal auto insurance policy will cover the cost of an accident. After all, you are driving your vehicle. So, why wouldn’t your personal coverage apply, right? But when you drive for a rideshare company, your insurer considers that to be a commercial activity.

Accidents or other incidents that occur during “commercial activity” aren’t covered by a personal auto insurance policy. So, if something happens, you’ll be footing the bill for repairs and medical costs.

And if your insurance company finds out that you’ve been using your vehicle for ridesharing, they may cancel your policy for not disclosing this activity. As a rideshare driver, you’re on the road more often than a regular driver, which means there’s a much higher risk of accidents and injuries.

In other words, you’ve become a high-risk driver – even if you have an impeccable driving record.

Are you looking for a rideshare insurance quote?

Personal auto insurance policies are not designed for ridesharing.

Yes, Uber and Lyft have commercial insurance, and their insurance does cover accidents and incidents that happen while you’re driving passengers around. But their coverage won’t apply the entire time. For example, let’s say that you’re parked and waiting to pick up an Uber customer, and a tree falls onto your car. Uber’s insurance won’t cover the repairs, and neither will your insurance policy.

You’ll be stuck with the bill to fix your car.

Also, Uber and Lyft insurance policies have steep deductibles. For example, let’s say that you get into an accident while taking a customer to their destination. The company’s insurance will kick in, but you’ll have to pay a $2,500 deductible.

Here’s what can happen if you don’t have rideshare insurance:

  • If you get into an accident while driving for Uber, Lyft, Grubhub or another similar service, the rideshare company’s commercial policy may cover the damage to the other person’s vehicle. However, your insurance company may drop your coverage if they find out that you have been driving for a rideshare service.
  • If you’re at fault for an accident while driving a customer or making a delivery, the rideshare company’s collision policy may pay for the damages. But you will have to pay thousands of dollars in deductibles.

If you wind up being dropped from your insurance policy because you didn’t disclose your rideshare activity, you may have difficulty finding a company that will insure you. If you do secure insurance, you may have to pay a high price for your coverage.

But, if you want to avoid having gaps in your insurance while driving for a rideshare service, you need to have rideshare insurance.

What You Need to Know About Uber and Lyft’s Insurance

You know that Uber’s and Lyft’s insurance policies will provide coverage, but not all of the time. It’s important to understand when you’re covered and when you’re not. Having a better understanding of how their insurance works will make it easier to find the right coverage to fill the gaps.

Rideshare companies divide their coverage into different categories. In most cases, these categories are as follows:

  • Waiting for a request (a.k.a. Period 1): You’re logged into the company’s app, but you haven’t accepted a ride or delivery yet. In most cases, Period 1 is not covered by the rideshare service’s insurance. In addition, your personal insurance likely won’t provide coverage either. For example, if you get into an accident or a tree limb falls on your car, damages may not be covered.
  • En route to pick up a customer (a.k.a. Period 2): You’re driving to the customer’s pick-up location. During this period, you should be covered by the company’s insurance. However, most companies only provide limited liability coverage.
  • En route to the customer’s destination (a.k.a. Period 3): You are driving the customer to their destination. During this period, you are also covered by the company’s insurance policy. Once the customer has been dropped off, you go back to Period 1 and having limited or no coverage.

As you can see, there are several points here where an accident or incident may not be covered by either the rideshare company’s insurance or your personal auto insurance. These gaps in coverage could leave you responsible for repairs or medical care if you’re involved in an accident.

Uber Insurance Requirements

Like any other rideshare company, Uber requires you to have a valid auto insurance policy that meets your state’s minimum requirements.

The company even states on their website that drivers “who have a livery or limousine business” are required to maintain the licensing and commercial insurance requirements in their respective states.

The company recommends having rideshare insurance to provide more protection.

Which Insurance Companies Offer Rideshare Insurance Policies?

Now that so many drivers have joined the rideshare community, major insurance companies are offering rideshare insurance coverage, including:

GEICO Rideshare Insurance Policies

GEICO’s rideshare insurance replaces your personal auto policy. Their policy will cover you all the time, whether your rideshare app is on or off. With GEICO’s rideshare insurance, there’s no need to have a separate personal auto insurance policy. You’ll be covered whether you’re driving for Uber or running personal errands.

The great thing about GEICO’s rideshare insurance is that you only have to manage one policy.

What Does GEICO’s Rideshare Insurance Cover?

  • Damage to other people’s property and bodily injury to other people
  • Damage to your vehicle
  • Medical costs for you and your passengers
  • Uninsured motorist coverage
  • Damage or losses from theft, fire, flood or animals.
  • Reimbursement for roadside assistance and towing expenses
  • Rental reimbursement

What is Not Covered?

According to GEICO, a rideshare policy does not cover vehicles that you don’t own. So, if you’re using a friend’s or family member’s vehicle for ridesharing, GEICO’s insurance would not cover the vehicle.

Farmers Rideshare Coverage

Farmers also offers rideshare coverage as an add-on to your personal auto insurance policy. The add-on extends all of your private auto insurance coverage to those times when a rideshare app is on, but you haven’t accepted a ride request.

The coverage helps fill the gap in coverage to keep you protected at all stages of your rideshare activity. However, there are a few caveats:

  • Farmers does not provide deductible gap coverage, which means that you will have to pay the rideshare service’s entire deductible.
  • Once a ride is accepted, your Farmers policy no longer applies.

Progressive Rideshare Coverage

Progressive offers two options for rideshare coverage:

Policy Endorsement

If you’re already a Progressive customer, you can add a rideshare endorsement to your policy. Unfortunately, coverage is only available in certain states (see the list here).

Progressive’s rideshare endorsement also offers deductible reimbursement. The insurer will reimburse you for the difference between your deductible and the rideshare company’s deductible.

Commercial For-Hire Livery Coverage

Progressive also offers rideshare coverage through a for-hire livery insurance policy, which is a commercial policy designed for taxi and luxury vehicle services. Rideshare drivers can purchase this type of policy because they are earning an income from driving passengers.

State Farm Rideshare Coverage

State Farm’s rideshare insurance provides coverage at all stages of your rideshare activity.

When you’re not on the app or driving for Uber, Lyft or another rideshare service, your personal auto policy coverage will apply. For example, your rideshare coverage will apply when:

  • The app is on, and you’re available to accept rides. All of your personal auto insurance coverage will apply, including third-party liability.
  • You’re matched with a customer. All of your personal auto insurance coverage will apply, except for liability, including third-party liability.
  • Transporting a passenger. All of your personal auto insurance coverage will apply, with the exception of liability, including third-party liability.

According to State Farm, rideshare insurance will cost 15%-20% of your current premium, which is a standard rate.

Rideshare Insurance is a Must-Have

If you drive for Uber, Lyft or another rideshare company, rideshare insurance is a must-have. Without it, you may be left having to pay for repairs or medical bills out of pocket because you weren’t adequately insured. You also run the risk of your insurer dropping your policy because you never disclosed your rideshare activity.

Rideshare insurance will fill your coverage gaps and give you peace of mind that you’re protected when driving for a rideshare service.

Are you looking for a rideshare insurance quote?