Harry here. Rideshare insurance isn’t the most exciting topic in the world, but it is an important one. Our rideshare insurance page now ranks as one of the top ten pages on our site and we’ve built out an extensive database of options by state. Also, we have a list of recommended agents that readers have submitted and/or we’ve done our best to vet.
Today, RSG contributor Scott Van Maldegiam takes a look at what rideshare insurance covers and also what it doesn’t cover.
When I first started driving for Uber, my biggest concern was the insurance puzzle piece. I wanted to know what my exposure was in a worst case scenario. What’s the worst that could happen? Getting into an accident while driving for Uber where the accident was my fault or where the other driver was uninsured or underinsured. I didn’t want to be in a situation where the money-making activity of driving for Uber would become a severe financial hardship on my family.
Like most new rideshare drivers, I took the risk without making any changes to my coverage because I had my head buried in the sand. I felt like it wouldn’t happen to me. Sound familiar?
Over the past year, there have been quite a few readers who have shared stories of their accidents. With these stories, it became apparent that the majority of rideshare drivers don’t understand their insurance and, coming from a guy that feels pretty educated about insurance, I have also learned a thing or two.
Auto Insurance Coverages Defined
We have all heard of these different coverages but may not know the detail regarding what they cover.
Liability – This is the most understood coverage. If another party is injured or there is property damage, liability coverage kicks in. This coverage is NOT subject to your deductible. It covers first dollar for claims against you. Other parties include people in your car that aren’t family members.
Collision – This coverage pays for damage to your car in the event of an accident. This coverage is subject to a deductible. If an accident isn’t your fault, the other driver’s insurance should pay for your damage, but if the claim is contested, your insurance company will pay for your vehicle damage using this coverage, but you will still be subject to the deductible. Your insurance will then subrogate the claim. Once the other insurance company pays the liability claim, your insurance company will reimburse you for the deductible.
Comprehensive – This insurance covers damage to your vehicle not resulting from an accident. Examples of this are theft, vandalism, weather/hail, or falling objects. This coverage is also subject to your deductible.
Underinsured/Uninsured – This is pretty much what it sounds like. If you are hit by a car that is uninsured or your claim against the other party is greater than their insurance coverage limits, this coverage will pay for the treatment of your injuries. Depending on the state and insurance company, property damage may also be included in this coverage.
Medical – This type of coverage provides medical coverage where the accident results in injuries to you or your family member. For a long time, I felt like this was redundant coverage. In this time of high deductible medical insurance, this is valuable coverage to have for a low cost though. If you have an accident medical expense (AME) policy for your family, this medical coverage may be redundant except in our case. Most AME policies will have an exclusion for accidents that occur while participating in a money-making activity. This includes professional sports and taxi/delivery services.
Rental Car – This coverage provides a rental car while damage resulting from an accident is being repaired. The amount of coverage can vary. Check to see how many days are covered and what the per-day amount of coverage is.
Towing – This coverage covers the cost of towing your vehicle when it was in an accident.
What Coverage Is Lost While Online with Uber or Lyft?
During Period 1 (App on, waiting for a passenger request)
Personal insurance policies DO NOT cover rideshare drivers during period 1. And in this scenario, you will only receive contingent liability coverage from Uber and Lyft (NO collision coverage at all).
Here are the limitations of Uber and Lyft’s period 1 coverage:
- Contingent – If you are at fault, you will need to file with your personal insurance company and that company will need to deny your claim prior to Uber or Lyft’s contingent policy considering the claim.
- Liability only – No other coverage is provided by Uber or Lyft and the coverage is similar to state minimum coverage ($50k/$100k/$50k). So if you don’t have a specific rideshare policy:
- No collision or comprehensive insurance – if you are at fault, you will be responsible for the cost of the damage to your vehicle.
- No underinsured/uninsured insurance – if you are not at fault, but the other person is lacking adequate insurance, you will be subject to your medical and vehicle damage costs.
A rideshare friendly policy will protect you though against collision AND liability (at potentially higher limits) during period 1.
During Period 2 & 3 (En route to passenger or on a trip)
You would think you are completely covered by Uber or Lyft’s commercial insurance policies during this time and, for the most part, you are. There are a few things to be aware of though:
- Collision/Comprehensive – While most personal policies have collision deductibles of $500 or less, the Uber deductible is $1,000 while the Lyft deductible is $2,500. Those are hefty costs considering not only the costs of the repair, but also that you are losing the use of your income producing asset. Another important point is that this coverage is contingent in some states. This means that the driver must file with their personal insurance company first and that company will need to deny the claim before Uber or Lyft will consider the collision or comprehensive claim (although in some cases this hasn’t been required of drivers so YMMV).
- Underinsured/Uninsured – This coverage is for bodily injury only and does not cover your vehicle. The vehicle is only covered by the collision/comprehensive coverage.
- Missing coverages
- Medical – Considering that the majority of drivers have high deductible health insurance, the lack of medical coverage is significant.
- Rental – Your vehicle is half of your money making ability, so being without a vehicle prevents you from making the money you will need to pay for a portion of your car repair. (Note: You won’t be able to use a rental car or someone else’s car to drive for Uber while your car is being repaired but you could use someone else’s car if you drive for Postmates, Doordash, etc)
- Towing – This isn’t a significant loss since you can often get deals on towing from on-demand services like Honk or Urgently.
There are risks with everything in life. It is good to be aware of your risks. Do the rewards outweigh the risks? Only you can answer that. In my opinion, they do.
What can you do to protect yourself? Find an insurance company that offers rideshare insurance. Period 1 is the time where drivers have the least amount of coverage and this rideshare insurance fills in this gap. Check out our insurance agent directory to find an agent knowledgeable in rideshare insurance in your area.
Drivers, what do you think about the items rideshare insurance does and doesn’t cover? Are you aware of the risks and what have you done to mitigate them?
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-Scott @ RSG
Scott Van Maldegiam
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