What is Rideshare Insurance and Do You Need It?

Over the last 10 years, ridesharing has become an incredibly popular way of getting around. In fact, more than one-third of Americans use ridesharing apps as a way of getting home, trekking to the airport, and commuting to work.

The ability to request rides on-demand has not only changed the way people get around, it has also opened the door for drivers who are looking for a new way to bring in steady income.

As a rideshare driver, there are a few important things that you’ll need to do before you  accept your first rider. And one of those is to purchase rideshare insurance.

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What is Rideshare Insurance?

Whether you drive for Uber or Lyft on a daily basis or just to make a few extra bucks on the weekends, you will need to purchase rideshare insurance. This type of policy is intended to cover drivers who use their vehicles on a ridesharing platform and is meant as a form of gap coverage.

Currently, you can find rideshare insurance coverage offered either as a hybrid product — combined with everyday auto insurance coverage — or as an add-on to your existing auto policy. You won’t usually find rideshare insurance being offered as a standalone coverage option, however.

What Rideshare Insurance Covers

Just like typical auto insurance, rideshare coverage comes in a variety of different protection levels. You can opt for liability coverage, collision protection, personal injury coverage, or uninsured/underinsured motorist protection, based on your needs and budget.

Depending on the company you choose, you may also be able to purchase roadside assistance coverage as part of your rideshare insurance policy. This allows you to build a complete auto insurance product that protects you and your passengers, whether you’re on or off the clock.

As with any insurance coverage, you will pay regular premiums in exchange for protection when you drive. If an incident were to occur, the insurance company would step in to provide coverage against damages, injuries, and more, according to the limits of your policy.

Is Rideshare Insurance Necessary?

There are essentially four different coverage periods to be concerned with when you’re a rideshare driver:

  1. When you’re driving around for personal business, not logged into any ridesharing apps
  2. When you’re logged into a ridesharing app, but have not yet been matched to a rider
  3. After you’ve been matched to a rider, but are on your way to them/have not yet picked them up
  4. When you have a paying rider in the car

While rideshare services like Uber and Lyft will protect drivers when a rider is in the vehicle, the other time periods — when you’re waiting for or traveling to pick up a fare — are a little less clear. Plus, if you are a rideshare driver, some auto insurance policies may refuse to protect you even when you are driving for personal reasons, unless you’ve purchased rideshare insurance.

Rideshare Insurance vs Uber/Lyft Coverage

There are a few key differences between rideshare insurance and the coverage that’s automatically provided to drivers by the rideshare companies themselves.

As mentioned, drivers are typically covered by rideshare company policies while they have a rideshare passenger in the vehicle. When you don’t have a passenger in the car, you will need to be mindful of potential liabilities that may require extra insurance coverage.

For example, what if you are involved in an accident while the app is open and you are waiting to be assigned a fare, or if you get in an accident on the way to pick up a passenger? In this case, the rideshare company will often offer you coverage, but with limits that are lower than if you had a passenger in the car.

Additionally, the protection provided by companies like Uber and Lyft may involve high deductibles ($1,000+) if you wind up filing a claim. Rideshare insurance, on the other hand, usually allows you to set your own deductibles, just like a standard personal auto insurance policy.

Lastly, the coverage provided by rideshare companies will include property damage and bodily injury, but it won’t provide you with things like rental car coverage. However, a rideshare insurance policy might, depending on the coverage you choose to purchase.

Buying Rideshare Coverage

Since the concept of ridesharing is still fairly new, not all auto insurance companies will offer coverage. You may find that your existing auto insurance provider does not offer rideshare insurance policies, in which case you’ll have to start shopping around.

It’s important to remember that some insurance companies may deny claims against your policy if they find out that you’ve been driving for a rideshare service and not informed them or purchased rideshare coverage. This can be the case even if your accident occurs when you’re driving for personal reasons… so be sure to let your insurance company know if you plan to drive for a platform like Uber or Lyft.

Some insurance providers will allow you to add supplemental rideshare coverage to an existing personal auto insurance policy. For example, Allstate offers a ride-hailing insurance endorsement through Ride for Hire. This can be added to an existing policy and fills any gaps between the rideshare company policy and your personal auto insurance. Your existing policy will stay in effect when you’re not logged into a ridesharing app, but your new rideshare coverage will kick in when you are logged in and working. This ensures that you’re protected whether you’re driving for personal reasons or are on the clock, and the coverage limits between the two can vary. Progressive offers this gap coverage, as well, under its rideshare insurance coverage.

Other insurance companies offer hybrid policies instead. With these, you will have one set of coverage limits regardless of whether you’re on the clock or not, and you’ll be provided the same protection 24/7.

Gabi _210x100Be sure to read the fine print of any policies you’re considering. Check to see when the coverage begins — do they only cover you when you’re off-app (not logged in to offer rideshare services), or do they also cover you when you’re working? If they provide coverage while you’re driving for a rideshare service, is their coverage primary or secondary? To help find insurance that provides rideshare coverage, try a platform like Gabi, which provides comparisons and quotes for free.

While the cost of supplemental coverage can vary, you may see a 10-15% increase on top of your existing personal insurance premiums.

Do I Need Rideshare Insurance?

If you plan to drive for a company like Uber or Lyft, buying rideshare insurance coverage may be wise. In some cases, you might not even have a choice, as your existing personal auto insurance might not cover you once they find out you’re a rideshare driver.

There are different types of rideshare coverage, ranging from hybrid policies to supplemental/add-on coverage. Plus, of course, you’ll also have whatever coverage is offered to you by the rideshare company itself (though, you should be aware of the deductibles and limits involved).

Rideshare driving can be a great way to earn extra cash on the side, and can even make for a flexible full-time career. No matter how you plan to use these platforms for income, though, buying rideshare insurance should be priority number one.

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