Why Do I Need A Rideshare Insurance Policy?

Rideshare insurance is an important topic that we’ve covered extensively and will continue to cover.  According to our last poll of nearly 1,000 drivers, more than 90% of you do NOT have a rideshare friendly policy.  Now Uber and Lyft provide insurance during certain times, but there are still some major gaps that exist and can put drivers at risk.

So if you’re driving around without a rideshare friendly policy, this post will explain exactly what the risks are and what options you may have.  You may not have a rideshare friendly policy available in your state today, but more and more insurers are seeing the value in offering a product like this and that’s why we keep an updated list of insurance options by state here.

In today’s post, RSG Senior Contributor, Scott Van Maldegiam, takes a look at why drivers need rideshare insurance policies and also breaks down the three different types of rideshare insurance.

Why Do I Need A Rideshare Insurance Policy?

Why Do I Need A Rideshare Insurance Policy?

We have been working hard here at The Rideshare Guy educating drivers about insurance and the options available.  As we have gathered information, we understand there is some misinformation and/or misunderstanding for both drivers and insurance agents.  Most drivers and even some insurance agents don’t understand that there are a few different types of rideshare-friendly policies these days so let us break it all down for you.

Do I Really Need a Rideshare Friendly Policy?

This is a question every driver needs to answer for themselves.  In order to make this decision, drivers need to understand the additional risks they are taking by not having a rideshare friendly policy.
  • Dropped – If your insurance company finds out that your are driving as an Uber or Lyft driver, there is a good chance that you will be dropped from their coverage.
  • Higher insurance rates – If you do get dropped, there is an even better chance that you will be paying more for your insurance.  Insurance companies rate drivers that have been dropped as high risk and your new premium will reflect this.
  • No Coverage or Reduced Coverage – Since Uber and Lyft don’t provide collision coverage during Period 1 and only provide lower liability limits for coverage during Period 1, drivers are at increased risk during this time unless they have a policy that specifically covers Period 1.  You will be responsible for the following if you get into an accident during Period 1:
    • Pay for repairs out of pocket – If you get into an accident during Period 1 where you are at fault, you could be stuck having to pay for 100% of the repairs.
    • Pay for excess liability – Again, if you are at fault and subject to a liability claim during Period 1, you only have limited coverage.  You could be stuck paying a larger bill as part of a lawsuit if the amount exceeded the coverage (Uber would likely also be named in this lawsuit though).  Uber’s coverage during Period 1 is only 50k per person and 100k total for injury, and 25k for property.

Considering we are on the road more being a rideshare driver, it isn’t a matter of “if”, it is a matter of “when” we will be in an accident.

Related Article: How To Handle Rideshare Insurance After A Car Accident With Uber or Lyft

Rideshare “Periods”

Before we get into the types of policies, let’s review the 3 different periods of rideshare insurance:
  • Period 1 – Online & WITHOUT a ride request
  • Period 2 – Online & WITH a ride request (en route to pick-up, waiting for rider to come out, etc)
  • Period 3 – Online & with rider in car

Pretty simple, right?  With this understanding, let’s talk about the different types of policies.

Related Podcast: RSG002: Everything You Need to Know About Uber, Lyft and Sidecar’s Insurance Policies

Types of Rideshare Friendly Policies

There are basically 3 different types of rideshare friendly policies:
  • Commercial and commercial type coverage – All drivers have the ability to obtain a standard commercial policy but the cost is often prohibitive at $500-$600/month.  BUT there are other commercial-like policies available.  Erie Insurance, GEICO and Progressive all offer policies that cover the rideshare driver during ALL rideshare periods.  Uber and Lyft also provide primary insurance during periods 2 and 3, so with this type of commercial-like policy, the driver essentially has double coverage.  This duplicate coverage provides the greatest peace-of-mind since you can make a claim with Lyft/Uber or your own insurer (if they have a lower collision deductible for example).  Remember, Uber has a $1,000 collision deductible during periods 2/3 and Lyft’s collision deductible is $2,500 during periods 2/3.
  • Period 1 coverage only – These are newer policies that compliment the insurance offered by Uber and Lyft during periods 2 and 3.  They offer personal insurance that also extends your personal coverage into period 1 while rideshare driving.  While the rideshare companies do offer contingent (and in some states primary) liability coverage during period 1, this type of personal coverage is a better option because it gives you collision coverage during period 1.  Remember, Uber and Lyft offer NO collision coverage during period 1.  Farmers, USAA, Travelers and Metromile are a few of the companies that offer this type of coverage with more being added every few months.  You can find a full list here.
  • Rideshare friendly personal policies – These insurance policies are just standard personal auto insurance policies that won’t cancel you if they find out you are a rideshare driver.  They do not insure during any of the periods but they also won’t drop you if you tell them you’re a rideshare driver.  Liberty Mutual is one of the companies that provides this type of coverage.  If you are the type of driver that stays in one place while online without a request, this coverage is a great option.

Confusion

Drivers aren’t the only ones that are confused about what options are available.  I have run into agents that don’t understand what their own insurance companies offer when it comes to rideshare.  This is especially true when it comes to policies that won’t cancel you if you are a rideshare driver but won’t cover during period 1, 2 or 3.  Here are a few examples.

  • A rideshare driver was working with an insurance agent that was emphatic that his insurance company did not insure rideshare drivers.  After a few emails back and forth, the agent back tracked and decided to do some research.
  • An executive at a certain insurance company contacted us and said they did not insure rideshare drivers.  We asked if his insurance company would cancel a policy if they found out one of the drivers on that policy was driving for Uber or Lyft.  This person said he didn’t know and would get back to us.

These examples aren’t meant to be critical.  They just show that there is a lot of uncertainty when it comes to insuring rideshare drivers.  As more and more policies come to market, this will gradually change.

State specific requirements

A number of states have made having primary liability insurance during period 1 a requirement.  California and Colorado are two of the states that have passed such legislation and in both cases, Uber and Lyft upped their Period 1 liability insurance to primary in order to comply with the law.

BUT primary liability doesn’t do a whole lot for you as a driver since generally it’s very uncommon to have an accident that involves a liability claim but not a collision claim.  So in these two states, if you get into an accident during Period 1, you would be responsible to any and all repairs to your vehicle.

Decisions

Every rideshare driver needs to make a few decisions:

  • Comply with the law – Will you as a driver just risk getting caught with insurance that doesn’t meet the guidelines of your state for period 1 or will you obtain new insurance that complies?  This is a personal decision that every driver needs to make for themselves.
  • Accident during period 1 – How will you handle an accident while online but without a request?  Technically, if you have a policy that does not cover for rideshare driving or for period 1, you will need to use Uber or Lyft’s contingent coverage, but you may need to file a claim with your insurance company first.

Related Article: Rideshare’s Little White Lie

Change

Change is inevitable which is especially true with rideshare insurance.  I expect more rideshare insurance options will become available soon but for now here is the full list of available options.  The lastest announcement came back in June when Allstate announced they would rollout rideshare coverage by the end of the year in four states with more to come in 2016.

Their policy will also be slightly different by supplementing the TNCs’ collision insurance.  In other words, during period 2 and 3, the Allstate policy collision deductible will cover the driver until the TNC collision coverage kicks in.

I expect small differences between policies to be the new normal as insurance companies attempt to differentiate their products from one another.

And another significant change…  Sidecar has eliminated collision coverage for its drivers.  Sidecar states they have eliminated this coverage with their change in focus to deliveries.

Updates

We will continue to update our Rideshare Insurance page in order to provide you with the latest information.

Drivers, do you have a rideshare-friendly policy?  What type do you have?  Are you even concerned about your insurance coverage?  Please share your thoughts and opinions in the comments.

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-Scott @ RSG

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Scott Van Maldegiam

I'm Scott, a full time health benefits consultant and rideshare driver. I spent 11 years working for Motorola and Tellabs using my EE degree and MBA before transitioning into the mortgage industry where I spent 6 years. I then spent 5 years in the cycling industry before transitioning into health insurance.
  • Tyler

    Under what circumstances are people getting dropped from their current insurance policy? Is this a common trend?

    • Well…if you have an accident at some point of the claim investigation your insurance company will find out that you were driving a passenger for a fee (driver for hire) what means that your were using your car for business. Unless you have a commercial policy that covers driver for hire probably the claim will be denied by your insurance company and probably they will drop you for the same reason.

      • RedPillRenegade

        If you had a passenger in the car this means you were in period 3. If you were in period 3, you should have full primary coverage. There should be no need to report anything to your personal insurance since Uber is insuring you under this period. Does Uber report anything to your personal insurer? I can’t imagine they would do that since they know that their business model would collapse if drivers had to tell their personal insurers about their activity and were forced to get commercial insurance. Uber drivers simply couldn’t afford it with the rates they get.

        • You are correct, if the accident happens in period 2/3 they do not require you to file a claim with your personal insurer so there is no way they’d find out unless you tell them.

          It’s only a real issue during period 1 since in order to get collision you have to go through personal insurer.

          This has been an issue for a while now: http://therideshareguy.com/rideshares-little-white-lie/

          • RedPillRenegade

            Here is a question, if someone did have an accident during period 1 and did not tell their insurer they were working for a ride share, what means do insurance companies have to find out? I would guess they would take your word for it if it’s a minor accident. But in the case of a serious accident where millions of dollars or even a death could be involved, I’m wondering if insurance companies would do a more severe investigation into whether you’re ride sharing in order to avoid a payout. I’m guessing that they could subpoena records from Uber or Lyft and see if you are matched as one of their drivers. Or maybe they could be granted access to your tax records and find out you got payments from TNCs. I just don’t know how much power insurance companies have to find out if you were with a TNC in the case that you denied it. I’m also disturbed to know that even if I quit ridesharing tomorrow, If I get in an accident 4 months from now, the insurance company could still void my policy if they somehow found out. I feel I was duped. I just didn’t know ridesharing was barred from personal policies as long as Uber was providing insurance during your drive. Then I looked into the fine print and found out it was way more complicated than I knew. Now this hangs over my head even if I choose not to do this activity anymore.

          • I’d say the odds of that happening are very low since drivers likely make up a tiny % of their overall policies. So it’s easy for them to just ask the question but I don’t see how/why they would go beyond that.

            Most drivers that get into accidents during period 1 are likely just lying to their insurance companies and saying they were driving around but not for uber/lyft. Can’t say I blame them…

          • Chacho Medina

            And well that’s the way 90% of drivers will do it. They’ll hit cancel, log off, and nobody will ever know whether he was on his way to pick up a passenger or a slurpee from 7/11.

      • It doesnt matter if it is in period 1, 2, 7 or 85. If passenger gets hurt in the accident, or if they go to a lawyer…your insurance company will know it and they will drop you as fast as they can. You guys are driving a car for business but want to be covered with a personal policy because it is cheaper. If I have a business and my business dont generate enough money to pay for the proper insurance…maybe I am in the wrong business. Just saying…

        • I completely disagree. First of all, if your pax goes to a lawyer, that means you’re in period 2 or 3 and Uber’s insurer would cover you so that is who they’ll be suing.

          Second, you’re right this should be treated like a business, but if the gov. imposes antiquated insurance requirements, and there aren’t any suitable options to fulfill those options why is that your fault?

          Why the hell should I be forced to buy commercial insurance for an activity where I’m covered 90% of the time by uber’s CI. That is complete and utter inefficiency at its finest. So yea I think you are in the wrong business..

  • Dennis Ocallaghan

    Hi I am a New Zealander Considering Uber Driving In Auckland our biggest City . Do you have any information on Rideshare Policies as your calling them for the New Zealand Situation
    Regards
    Dennis

    • I don’t. Sorry about that, I suspect it will be a WHILE before the international insurance market catches up, just based off how long it’s taken in the us.

  • Les Howard

    Hi, I live in Minnesota. Just had an accident, got dropped by my insurance Geico. I was not aware of this insurance stuff. I did not do my research. Thank God I was in period three. Uber is taking care of repairs; I have not got the check yet. $1000/ deductible. I want to continue to drive but no Insurance will cover me. I will either have to stop driver for Uber or move to another state. I cannot afford this commercial insurance.

    • Scott Van Maldegiam

      Glad to hear that Uber is taking care of you with regards to the accident. Sorry to hear you got dropped by GEICO. Your story is a cautionary tale for all drivers that don’t have rideshare friendly insurance policies. I wish I knew of any options in Minnesota.

      • Les Howard

        Hey Scott, thanks for responding. I do not intend to give up. There has to be a way here to do this without paying so much for commercial insurance. When I find it I will let you know.
        Les

        • Soccer31

          I have been checking in MN for Ride Share policies and have not found a company that offers one yet, Tried State Farm, Geico, All State and Progressive.

  • Mila

    Hi, so happy to have found this site as it seems to be where I can get the most information. Still very confused about NY though as there doesn’t seem to be much information. Currently in the application phase for Uber, got my license and now needs to get the commercial insurance before my TLC appointment on Thursday. I want to be compliant with the law and with my personal insurance which i already know doesn’t cover rideshare in NY. What are my best options in terms of coverage? Thanks in advance for any tips you can provide. Or even in terms of who actually provides some type of coverage in NY? Thanks in advance!

    • Welcome 🙂 NYC is not a typical UberX market since as you’ve discovered, you need all the additional licensing and commercial insurance. You can start with your personal insurance agent and see if they offer commercial policies or go to a broker who can search/sell multiple policies.

      Here are some more tips: https://www.youtube.com/watch?v=OLGnwNAV39Q

      I suspect you could also find current uber drivers in nyc and talk to them about it (either on FB or by requesting a ride).

      therideshareguy.com/facebookgroups

  • Jackson

    Hi Harry,

    This begs the question how would your insurance company know you were a rideshare driver if you were in an accident during period 1. Presumably only the driver and Lyft would know you were driving online without a pickup request. Does Lyft/Uber release this information to insurance companies? What if the driver completely left Lyft out of the equation and simply reported an accident to his insurance company as though he was on the way to the grocery store.

    • Jackson

      Actually I see this is addressed in the comments below. All good!

  • Big Pete in ME

    Hi Harry & Scott,
    Thank you both for the valuable information in today’s mail. In Scott’s message, he writes about what’s missing in Periods 2&3 and one item in particular confuses and frightens me.

    Missing coverages

    Medical – Considering that the majority of drivers have high deductible health insurance, the lack of medical coverage is significant.

    Are the PAX covered by Uber for medical expenses and, do you know if Uber’s $1,000,000 liability is for each rider or is it per accident?

    Thank you in advance!

    • Yes they are covered by Uber’s liability and it’s per accident.

      • Big Pete in ME

        Thank you! I wonder why Uber doesn’t strike a deal with a national insurance company to offer we drivers a policy called a “Rider” which is attached to the driver’s personal auto insurance? For part-time drivers such myself, this Rider would only be in force while the app is on. I would gladly allow Uber to deduct the premium from my weekly pay, in order to have peace of mind while driving. I received a quote from an insurance company asking for nearly $5000. for commercial auto insurance. Obviously not an option for a part-timer! Does anyone know if a passenger is notified that they are agreeing to the one million
        dollar liability which Uber offers?Thank you again.

  • MIzRich

    As an Uber/Lyft driver I was concerned about the holes in coverage and so I got a “Rideshare/Commercial” policy with Geico. The premium was slightly less than my personal policy with more coverage offered. I ended up having an accident (personal time) and found the Geico’s Commercial side of the business is awful!!! The customer service we are accustomed to as consumers is nonexistent. You can only reach an agent 8am-6pm Monday – Friday. The adjusters were fine but, the total loss adjuster handling my claim had to leave on a family emergency and was gone for weeks, in the meantime the car rental company kept calling me because they were not getting any updates or communication from Geico. The rental company notified me when 30 days expired and advised me that the rental was now coming out of my pocket. I called Geico and they began to work on the claim…one of the reps acknowledged that she was filling in for the original person….bottom line, I had to pay $300 + out of pocket and the other driver had accepted fault. Geico did handle my claim as if I was their customer….it was awful. Even the rental company acknowledged that working with the commercial side of Geico is like night and day. I would not recommend commercial coverage through them….I know it is a catch-22 situation but our dollars spend the same whether we are personal or commercial customers and GEICO should treat their customers well regardless. It was very disappointing, I had been with Geico personal for over 10 years.

    • That sucks but thank you for the feedback, what state are you in? It sounds like you may want to consider switching to a different company for your rideshare insurance: therideshareguy.com/rideshare-insurance-options-for-drivers/

      I had Geico personal a few years ago and they were always great, so it’s surprising to hear their commercial side dropped the ball. Hopefully it was a fluke.

  • Beatle Icious

    Hubby just started with UBER and, before we even got him in the saddle, we changed insurance companies to one that will cover him on this mission. Farmer’s was great and even threw in renter’s insurance for a couple $ more, so it’s a win-win for him on that aspect. When I read that about 90% of UBER drivers don’t have this coverage, I couldn’t believe it. It’s so important. Love this blog, btw….just bookmarked it for hubby to reference. It’s already answered a lot of questions and broached subjects we’ve had rumbling around in our heads since joining UBER. 🙂