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.
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?
- 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.
- 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.
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, optOn, 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.
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.
Related article: Essential gear every rideshare driver should have
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.
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 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.
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