Harry here. Rideshare insurance is one of the topics we get asked about most frequently here on the blog. Today, RSG senior contributor Jon Knope takes a look at the 11 most frequently asked questions about rideshare insurance. If you’d like to sign up for rideshare insurance, or talk to an agent and get a quote, please click here.
Car insurance can be an overwhelming topic and adding Uber and Lyft into the mix just makes it more so! Here, we’ll answer some questions we get from new drivers and seasoned veterans alike. If you’ve been ridesharing for a while but still aren’t 100% clear on the insurance issue, give this a read – and let us know if we missed anything!
1. Don’t Uber and Lyft provide insurance?
Rideshare driving is divided into three periods: period one is when you’re online waiting for requests, period two is when you’ve accepted a request and are en route to pick up the passenger, and period three is when you’ve acquired the passenger and are driving to their destination.
During period one, you won’t receive any collision coverage – and the liability limits are much lower than normal. One nasty accident could quickly exceed them, putting you on the hook for many months’ worth of earnings. During periods two and three, Uber and Lyft provide commercial insurance with $1 million in liability but $1,000 deductible on Uber and $2,500 deductible on Lyft.
Another issue is that personal insurers reserve the right to nullify your coverage entirely if you violate their terms and using your vehicle for commercial purposes (such as Uber, Lyft, or food delivery) is one such violation. If (or when) your personal insurer finds out you’re a rideshare driver, they might drop you from your policy and/or deny coverage.
See more reasons to get rideshare coverage here.
2. How does a rideshare insurance policy work?
There are two main types of rideshare insurance: Gap coverage and extended coverage. Both types protect you from financial disaster by modifying the “commercial activity” clause in your contract so that you can drive for Uber and Lyft without the risk of getting dropped from the policy. Gap coverage extends your personal policy to include period one, ensuring that you’ll be adequately covered no matter when an accident occurs. During periods two and three, you’ll still rely on James River – Uber’s insurance provider.
Some gap insurers, like Allstate, have additional perks like deductible reimbursement. Uber’s deductible during periods two and three is $1,000, and Lyft’s is even higher at $2,500. If you’re ever on the hook for that amount, Allstate will reimburse you so that the deductible you pay to James Rivers matches the deductible on your own policy.
Other companies offering gap coverage include Farmers, Mercury, and USAA.
Extended coverage takes it a step further by expanding your coverage (deductible and all) to include all three periods. The most important benefit is that you won’t have to deal with James River. They’re not known for having good (or even adequate) customer service, and getting a claim paid out can take months – which can be downright devastating if you drive full-time. Extended coverage from a company like GEICO ensures that you won’t be in for any unpleasant surprises. More companies offering extended coverage include State Farm and Metlife. Others, like SafeCo, offer a sort of hybrid of the two types, depending on the details of your particular policy.
3. Is it better to get a policy that covers all three periods, or will gap coverage be enough?
Extended rideshare coverage, as mentioned above, is better because you won’t have to deal with James River – and in rare cases, having redundant coverage during periods two and three could come in handy. If the accident is catastrophic and outstrips the liability limits on your own policy, the damages should theoretically roll over to Uber or Lyft’s policy. And if you have other benefits on your policy, like rental reimbursement, you’ll still be eligible for those regardless of whether you were on the clock when the accident happened. It’s also nice to have a good agent fighting for you in the event that the other person is at fault since you can go after lost wages, rental reimbursement, etc in that case.
Gap coverage is usually (but not always) cheaper, so it may be a better choice if you only drive part-time – but depending on which company you go through, you may be on the hook for those high Uber and Lyft deductibles if an accident happens on the clock.
The best way to choose is to get quotes from as many rideshare insurers as you can and compare your options.
4. How much does it cost?
This is hard to answer, as insurance rates depend on dozens of factors, including your age, driving record, zip code, even your credit score. Typically, it is more expensive than regular insurance – but if it’s been awhile since you last shopped for quotes, you may find that rideshare insurance from another company works out cheaper than what you’ve got now. With some insurers like USAA, adding a rideshare endorsement to a policy can cost as little as $10 a month.
Back in August, we collected sample quotes from four popular rideshare insurance providers, so be sure to check those out if you’re looking for some ballpark numbers.
5. Do I need collision?
Probably – even if you’ve got an older car. Collision coverage from Uber and Lyft during periods two and three is contingent on your own collision coverage. From our earlier article:
“Although Uber does offer collision coverage during periods two and three, that’s only true if you maintain collision insurance on your personal policy as well. Even then, Uber’s rather large $1,000 deductible still applies.
If your car is getting on in years and you’ve opted to forego collision insurance on your personal auto insurance policy, Uber will also forego giving you that coverage if you get into an accident during periods two or three. This has come as a surprise to many drivers who thought they would still get collision coverage while on the Uber platform. For this reason, it’s a good idea to get collision coverage on your own policy – especially if you’ve got a newer vehicle.”
6. Can’t I just keep my regular personal insurer?
Lying to your insurer isn’t just grounds for getting dropped from your policy – it’s also a crime. If you do get dropped from your policy, it may be hard to find a company willing to insure you again. Of course, if you’re already on the hook for damages (and without your car to boot), finding new insurance will be the least of your worries. Suffice to say that flying under the radar is a big risk.
7. Where can I get a quote for rideshare insurance?
Most states now have at least two choices for rideshare insurance – and some have over a dozen. For a comprehensive list of insurers offering rideshare coverage in your state, head over to our Rideshare Insurance Marketplace.
8. What about delivery (DoorDash, Postmates, Caviar, GrubHub, Amazon)?
Anyone who drives for money is in the same boat here – even pizza delivery drivers at big chains face this issue. Commercial activity is commercial activity, and it’s a valid reason for most insurers to drop you.
Unfortunately, the issue is further complicated by the fact that delivery-friendly personal insurance policies are still hard to come by. Read the fine print, and you’ll find that many rideshare-friendly policies offering coverage for Uber and Lyft drivers are worded specifically to exclude commercial activity through other apps or companies. There are options out there, though – GEICO in particular offers commercial policies that will cover you on almost every platform you can think of.
For more resources, see our recent article on how the various delivery apps handle insurance.
9. What if my car is a Lyft rental or an Xchange lease?
For Lyft and Uber rentals through Hertz, GM, and Enterprise, the issue is a bit more complicated. Included with the rental price, you’ll receive some level of insurance – and of course while you’re ridesharing, you’ll be under the usual policy. But when you’re not driving for Uber or Lyft, they may not provide collision insurance. Most concerning is that the insurance provided by the rental company sets your liability limit at the state minimum – which in some cases is $0. If you’re putting personal miles on your Uber or Lyft rental, it’s a good idea to protect yourself financially with additional liability and collision coverage – State Farm in particular offers policies geared towards this situation.
10. My car got messed up in an accident. Can I collect lost wages?
If the other driver was at fault, the answer is yes. However, actually collecting them can be a challenge. Any lost wages you collect should be paid by the at-fault party’s insurance, but it can be more difficult to get them to pay – they deal with this type of claim far less frequently. Your best bet may be to enlist the help of a personal injury attorney, as you’ll likely be dealing with a lot of paperwork and they typically can get a better deal for you.
11. I have other questions, who can I talk to?
Some drivers have reported being dropped from their personal insurance policy just for inquiring about the ramifications of driving for Uber/Lyft. So if you’re thinking about driving, you may want to call anonymously and get a quote or inquire for more info.
The best way to get help though is to get rideshare insurance. Then, you’ll always have an agent (or at least a customer support person) on your side ready to answer questions. Of course, feel free to ask us here on the blog too! We’re happy to help where we can – let us know your question in the comments. That way, everyone benefits!
Remember, you can find a comprehensive list of insurance options in your state through our Rideshare Insurance Marketplace.
Readers, do you have rideshare insurance? Which company are you using for rideshare insurance? If you have more questions, leave a comment below!
-Jon @ RSG
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