Uber or Lyft Driver? Why You Need Rideshare Insurance

October 25, 2016

There is one extra hurdle you should go through before picking up your first passenger: getting the right rideshare insurance.

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 By Kayda Norman


It's hard to believe that just a few years ago, rideshare options like Uber and Lyft didn't exist. Now, people rely on the convenience of rideshare weekly, or even daily.

Rideshare's rise in popularity hasn't just made it easier to get to and from work, it’s also become a quick way for people to make extra cash. Uber alone has over 300,000 drivers, with more people joining every day.

It's easy to see why. Both Uber and Lyft drivers have the flexibility to set their own schedules and choose which riders they pick up.

Requirements are basic. Uber even rents out cars so you don't need to own a vehicle to sign on as a driver. And with Lyft boasting that some people make over $800 on weekend nights, becoming a rideshare driver seems like one of the fastest and easiest ways to make extra money.  

Rideshare Insurance

But while signing up is relatively easy, there is one extra hurdle you should go through before picking up your first passenger: getting the right rideshare insurance.

You might assume your personal car insurance protects you while you’re working as a rideshare driver. Unfortunately, this is not always the case. That coverage usually only protects you if your app is closed. Otherwise you need to buy commercial car insurance or a rideshare friendly policy.

Luckily, both Uber and Lyft automatically insure their drivers. While this coverage is substantial for part of the time drivers are using the app, there are some serious gaps in their insurance policies.

Specifically, Uber and Lyft’s policies are lacking during period 1. Period 1 refers to the time when you turn on your app but haven’t accepted a trip yet. Period 2 is when you’ve accepted a trip and are on your way to pick up a passenger. Finally, you’re in Period 3 when you’ve picked up your passenger and are driving them to their destination.

Liability Insurance

Both rideshare companies offer sufficient insurance for Periods 2 and 3. But during Period 1, if your insurance company won’t cover you (and there’s a good chance they won’t), then you’re only provided limited liability coverage.

Liability insurance pays for damages if you cause an accident. It pays for the other person’s medical bills, and their property or car damages.

For Period 1, Uber and Lyft both provide the following liability insurance:

·       $50,000 injury per person

·       $100,000 per accident

·       $25,000 property damage

Though these amounts meet the minimum liability requirements in every state, you may find yourself in a lot of debt if you do get into an accident.

Most experts recommend you get as much liability coverage as you can afford. At a minimum, you should buy:

·      $100,000 of bodily injury coverage per person

·      $300,000 of bodily injury coverage per accident

·       $50,000 of property damage coverage

The good news? Rideshare insurance should only increase your premium by $20 to $40 a month.

Looking to increase your coverage? Your options will vary depending on where you live. Check out this rideshare insurance guide that breaks down your coverage options state to state.

Collision and Comprehensive Coverage

Other options you might want to consider as a rideshare driver? Collision and comprehensive coverage, as well as roadside assistance.

Collision coverage can come in handy if you get into an accident and then need help paying for damages to your car. This applies to crashes with other vehicles, as well as stationary objects like trees or a telephone pole.

Comprehensive insurance protects you if your car is damaged from something other than a crash. This can cover a number of scenarios such as vandalism, a hail storm, or a tornado.

Roadside Assistance

Roadside assistance is another kind of protection you might want to consider. And, like most things these days, consumers can even request help right from their phone.

Apps like Urgent.ly make getting assistance quick, easy, and affordable. Unlike AAA, you won’t need to pay an annual membership fee for Urgent.ly’s services. Instead, you pay for each item ala carte. A detailed listing of their services and prices can be found here.

No matter where you buy it, roadside assistance can help you with a number of unexpected situations, including:

·       Towing

·       Tire change

·       Gas delivery

·       Jump-starting your battery

·       Unlocking your car

As a rideshare driver, you’re likely on the road more than your typical American. Because of that, roadside assistance is more than worth the money. Beyond the peace of mind of knowing you won’t be stranded on the side of the road (or worse, stranded with a passenger in tow), it’s very affordable.

Getting it might even save you money. Some insurers will reduce your premium rate if you sign up for a service plan.