Rideshare’s Little White Lie

One of the best ways for me to figure out what to write about is to base my articles off the questions I receive from readers.  So if there’s a topic that’s trending and people want to know more, I’ll generally receive a ton of questions about it via e-mail, social media and the Q&A Forum and then I write about it. 

And although I still respond to every e-mail I get, it’s definitely gotten harder as the site has grown.  As a result, I actually now offer one on one coaching services (more on this in a future post) and based off the initial response, it seems like there are quite a few of you willing to invest in your craft.  But today’s topic arose because it seems like many of you still have questions about Lyft and Uber’s insurance policies.  Before reading this, I encourage you to check out all my other insurance articles/podcasts though.

Rideshare’s Little White Lie

Rideshare insurance has been a topic that is near and dear to my heart for some time now.  When I first started driving almost 9 months ago (wow, has it been that long?!), I thought it was kind of cute that I wasn’t supposed to tell my insurance company I was a rideshare driver.  In fact, it kind of made me feel like a bad ass.

For once, I was sticking it to the insurance companies instead of the other way around.  But that was almost a year ago and a lot of the issues that plagued the industry then are still around today.  And I for one, am getting tired of it.

Related Podcast: Everything You Need To Know About Rideshare Insurance 

The Basics of Rideshare Insurance

All rideshare drivers are required by Uber and Lyft to have personal insurance in order to become a rideshare driver.  Originally, the TNC’s wanted your personal insurance to cover all of your rideshare activities but the insurance companies quickly said ‘NO’ to that.  That should make sense too, if you’re driving people around and making money, you’re no longer engaging in personal driving activities so why would personal insurance be on the hook for that?

The Coverage Is Not The Problem

If you’re going to engage in livery, you need some type of commercial insurance for that portion of time while you’re driving people around.  As it stands now, Lyft and Uber offer primary liability and excess collision when you’re engaged on a trip or on your way to pick up a passenger.

So right now, as a rideshare driver you are 100% covered if you get into an accident.  I won’t go into every scenario since there are a lot of different possibilities and outcomes but either your insurance (not as likely) or Uber/Lyft’s insurance (more likely) will cover you if you get into an accident.  If the latter ends up happening though, you will have to pay a $1,000/$2,500 deductible to receive collision coverage.

Related Article: Could Lyft Drivers Be On The Hook For a $2,500 Deductible?

What’s The Risk Then?

I still see articles and comments popping up from time to time that say you’re not covered if you get into an accident while driving for Uber & Lyft.  That is 100% false, you’ll be covered.  But the real risk that stems from getting into an accident is that your personal insurance company will find out and drop you.

If/when you get into an accident while rideshare driving, you have the option of making a claim through your personal insurer or going through Uber/Lyft’s insurance company (they both use James River).  I know some people have been able to go through their personal insurance without being dropped but that is likely because they were never asked about being a rideshare driver.  Most personal insurance companies now ask this question as part of their standard protocol after you get into an accident.

I wouldn’t advise lying to your insurance company since that’s a crime.  But let’s say you decide to go through Uber/Lyft’s insurance in order to avoid having your personal insurance company find out you got into an accident while rideshare driving.  That strategy works well for the liability portion but since both companies offer collision coverage in excess, you will need to make a claim with your personal auto insurer first.  If they deny it (which they likely will), then Lyft and Uber will step in to cover you.  But you still run into the same problem as before since your insurance company will likely drop you from your policy once you admit to being a rideshare driver.

I haven’t gotten into an accident yet while driving rideshare (although it would make for good writing material :)) but I have spoken first-hand to a few people who have.

  • Going through your personal insurance company: I talked to a couple people who got into accidents and actually were able to successfully get covered by their personal insurance.  But both people I talked to did not reveal that they were a rideshare driver to their insurance company.  The first person said they were never asked and the second said that the adjuster asked a question about driving to work but nothing specific about being a rideshare driver.
  • Getting into an accident while driving for Uber: I spoke with one person a couple weeks ago who got into an accident and went through Uber’s insurance.  The process was slow and a bit painful but they did end up getting covered.  They did have to pay the $1,000 deductible but Uber did not make them file a claim with their personal auto-insurer first.  Technically, Uber is supposed to make you file a collision claim with your personal insurer in order to provide excess coverage, but if they don’t, then that’s very good news for drivers since it means you can get into an accident while driving for Uber, receive coverage from them and your personal insurer will never find out.
  • Getting into an accident while driving for Lyft: I spoke with two drivers who confirmed that Lyft forced them to make a collision claim with their personal auto insurer before even being allowed to pay the $2,500 deductible and get coverage through them.  In one case, the driver wasn’t dropped (I have no idea why since they should have been) and in the other case, the driver was.

These examples show just how confusing the whole rideshare insurance situation is right now.  If you get into an accident, you could have a completely different experience but it’s important to know what the risk is ahead of time, before something bad happens.

It’s The Lying That’s The Problem

If you couldn’t tell by now, I don’t really have a problem with the actual coverage that Uber and Lyft offers.  I think a $2,500 deductible is pretty ridiculous but I also have the option to drive for Uber instead if I don’t like it.  What I do have a problem with is the fact that these TNC’s and insurance companies still haven’t figured out a way to cover rideshare drivers.

I live in the state of California and if I were to call my insurer today, I know for a fact that they would drop me.  In fact, I have not found one personal auto insurance company in the state that will cover rideshare drivers.  So that means that there are hundreds of thousands of other drivers like me and they are all being asked to lie to their insurance company.

What’s The Solution?

The solution from regulators and insurance companies is for rideshare drivers to buy commercial insurance.  But at 10-20x the cost, that just isn’t feasible for most, if not all drivers.  Why should I have to pay commercial insurance for something that I may not use every week or even every month?

There are companies like Erie insurance that are now offering hybrid products to rideshare drivers in the state of Illinois and Indiana but they are the only company I’ve found so far that do this.  To be honest, I don’t really understand why there aren’t more companies lining up to insure rideshare drivers?  A hybrid policy that covers personal/part-time commercial driving is exactly what we as drivers need.  But clearly, it’s not a priority for insurance companies or Lyft and Uber.

For now, I’m going to do my best to help drivers find insurance companies that will insure rideshare drivers without having to tell that little white lie but ultimately my goal with this post is to raise awareness that there is a problem.  Drivers are really the ones with the most to lose and the most at risk because we are being asked to lie to our insurance companies and if we get into an accident, it will be nearly impossible to find a company that will insure us again.

Uber and Lyft don’t appear poised to do much but my hope is that insurance companies will see an opportunity here to make some money by covering rideshare drivers.  I commend companies like Erie who have already taken the first step and I’d like to see them expand their coverage to other states.  I know that I would sign up for a hybrid product like that in a heartbeat, even if it was a little more expensive.  For now though, there’s not much drivers can do, we’ll have to just keep on waiting…

Drivers, what do you think about ‘Rideshare’s Little White Lie’?  Do you think it’s fair that companies like Lyft and Uber are basically asking us to withhold the truth from our insurance companies?  If you’ve gotten into an accident recently, I’d love to hear what happened in the comments below.

PS – I’m working on a crowd-sourced insurance database that will help drivers find out about companies that will/won’t insure rideshare drivers.  If you’d like to help by making a few calls to insurance companies in your state, just send me an e-mail and I’ll give you access to the spreadsheet and a script to use when calling.

-The Rideshare Guy

👉Related article: Essential gear every rideshare driver should have