Rideshare Insurance

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What It Is, And Why You Need It

Did you know that if you’re a rideshare driver and your personal car is damaged while giving a ride, your personal auto insurance might not cover the cost? Or that the same is true if you cause an accident while driving for Uber or Lyft? Carpooling with others to save on gas and other expenses is a great way to get from point A to point B. However, if you’re an Uber or Lyft driver, there are some important risks to be aware of. Unless you have rideshare-specific car insurance, as a rideshare driver your personal auto insurance policy may not cover you in case of accidents or damage to your vehicle. Luckily, there are several options for rideshare drivers. We’ll explain what rideshare car insurance is, why it’s important for drivers like you, and how it differs from standard personal auto coverage.

What Is Rideshare Insurance?

Rideshare insurance is a type of supplemental policy that covers your car, your passengers, and any other people or property involved in an accident while you’re driving for Uber or Lyft. This ride-hailing insurance endorsement may help fill gaps between your personal automobile insurance policy and the commercial policy of a ridesharing company (referred to as a transportation network company or TNC). If you drive for a TNC (see definition above), this endorsement may be helpful.
You may choose to get a full ridesharing insurance policy, which combines both personal and business coverage into one auto policy.
Rideshare policies typically cover the following:

Liability

Rideshare insurance usually covers your liability to cover the cost of damage and injuries sustained by others as a result of your car accident – including passengers in your car at the time of the accident. Liability coverage is required by law in every state (with some exceptions).


Medical expenses

Rideshare insurance should also cover your passengers’ medical expenses if they are hurt in your car.


Rideshare vehicle damage

Rideshare insurance should also cover your car if it is damaged because of an accident while driving for Uber or Lyft.


Why Does Rideshare Insurance Matter?

Unlike standard personal auto coverage, which kicks in automatically when you get into a car accident, rideshare insurance is something you need to actively purchase and add to your policy. Your personal auto coverage, which is provided by your own car insurance policy, may not cover you as a rideshare driver. Rideshare car insurance can fill that gap between what your personal auto insurance policy covers and what you need to be covered as a rideshare driver. Keep in mind that car insurance companies are very clear that they don’t offer rideshare car insurance policies. Instead, they sell supplemental policies that go on top of your existing auto insurance to cover you as a rideshare driver. They are not the same thing – although many people use the terms interchangeably.

The National Association of Insurance Commissioners (NAIC) says that the major TNCs provide limited commercial insurance for their drivers using their vehicles for TNC business. Business use may include instances when the driver is en route to pick up a passenger or has a passenger in the vehicle.
However, the NAIC says that personal automobile insurance generally does not cover business use, so the driver might not be covered by either policy if he has not yet received a ride request and is available for hire. A ridesharing endorsement might help fill that coverage gap. Certain coverages on your policy will be extended so that they apply during the “app on” period as you’re waiting for a ride request.

If you’re waiting to be hired, you may be protected from having to pay for related accidents if an accident occurs. You may still want to keep in mind, though, that you will not have collision coverage if you don’t have collision coverage on your personal policy. If you’re waiting for a ride request to come in, you will still have to pay for the full cost of repairs to your vehicle if you have an accident. Similarly, if you don’t have comprehensive coverage on your policy, you still won’t have it through the ridesharing endorsement.

How Does Rideshare Insurance Differ From Standard Auto Coverage?

When you’re an Uber or Lyft driver, you should have three types of coverage on your car: liability, collision, and comprehensive. Standard personal auto coverage includes liability, collision, and comprehensive. But the coverage amount is based on your car, your driving record, and the number of passengers in your car at the time of the accident. Rideshare coverage, meanwhile, provides specific coverage limits for a certain set of circumstances and passengers. This means that rideshare coverage might not provide the full limits of what you need if you’re in an accident. Rideshare policies, however, are specifically designed to cover you when you’re on the clock driving for Uber or Lyft.

Ridesharing endorsements may also help you reduce your out-of-pocket costs when paying for a TNC’s high deductible insurance policy. Although some TNCs provide commercial insurance for drivers, if you are injured while working for the company, you will most likely have to pay the policy’s deductible.
In this situation, a ridesharing insurance endorsement may help bridge the gap between your personal auto policy’s deductible and the TNC’s deductible. If your collision coverage deductible is $500 and the TNC’s is $1,000, for example, the ridesharing endorsement may cover the $500 difference.

How Much Does Rideshare Insurance Cost?

Like standard car insurance, rideshare insurance is a financial product that is priced based on a number of factors, including your car and driving record, where you live, and the level of coverage you choose. Unlike standard car insurance, however, there’s no standard or average price for rideshare car insurance. Rideshare policies come with different coverage amounts, deductibles, and price tags. You’ll want to shop around, explore your options and find a policy that fits your needs while remaining within your budget.

Keep in mind that if you purchase a rideshare endorsement for your car insurance policy, you will most likely have the same coverage limit as you do for your own policy. In other words, if your regular policy has a $100,000 liability limit, your policy would also cover up to $100,000 in a covered rideshare insurance claim. If you purchase a separate rideshare insurance policy, you may need to set limits.

Get Rideshare Insurance with Magnum Insurance

If you’re an Uber or Lyft driver, it’s essential to make sure you have the right kind of coverage on your car. Our trained and certified local agents at Magnum Insurance are ready to help you navigate this conversation and select the best coverage that fits your needs and budget.

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