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Commercial Auto Insurance vs Ridesharing Insurance: What’s the difference?

Since the first ridesharing app hit the US in 2009, the numbers of both users and drivers have been notably climbing. Sixty-five million riders enjoy a convenient and accessible option for their commutes, be it to make it to a work meeting on time during rush hour, or to get to the comfort of their bed after a late night out. Approximately two million drivers enjoy a flexible work schedule in the comfort of their car, and competitive wages. 

Working in such a popular field of service, for well-known and well-to-do companies like Uber and Lyft, how are those drivers insured and protected? The terms “commercial insurance” and “ridesharing insurance” are often used interchangeably, however, there are some key differences in the way they work for America’s treasured ride share drivers

What is Commercial Auto Insurance?

First, let’s break down of the difference between types of insurance. Namely, commercial auto versus rideshare insurance. Commercial insurance policies are similar to regular plans in the nature of what they cover, however they are meant for vehicles used for professional purposes, not personal. These policies are thorough, 24/7 coverage plans with high premiums to match their quality. They require a taxi or a chauffeur license, and offer coverage for a driver and their vehicle while on or off the clock. Between the amount coverage and the amount of money they entail, commercial plans are often recommended only for drivers using their cars for work full-time or those looking to build a private clientele on their own. 

What is Rideshare Insurance?

Rideshare insurance looks different. It’s easy to think of rideshare insurance as a traditional personal policy, with an added ride share endorsement. Why the add-on? Let’s talk about the rideshare coverage gap. This term refers to the period after a rideshare driver turns on their app for work, but before a ride gets assigned to them. Uber and Lyft offer a form of commercial insurance that does not cover this period, but covers only from the point of assignment to the point of drop-off, making it difficult for a driver to rely solely on their employer’s commercial coverage. This is where rideshare insurance comes in. It fills in that gap, offering total coverage from clock in to clock out.

Technically, a driver looking to become employed by Uber or Lyft only needs a regular personal insurance policy; one that any normal driver might have. They might even seek out a coverage plan specifically for the self-employed, often offering appealing deals and discounts. However, a typical auto insurance plan won’t be keen to cover an incident occurring in the rideshare coverage gap, and that’s why it is often recommended for ride share drivers to get the ride share add-on. Some companies charge under $10-$15 per month for ride share insurance, while others charge 15%-20% of the existing premium.

The Difference Between Taxi Drivers and Rideshare Drivers

The key difference between a rideshare driver and taxi driver, is that taxi drivers tend to be regulated by state or local transportation authority, and are therefore highly regulated and heavily insured. Taxi drivers are required to be covered by commercial insurance, which means they are protected the moment they start their ignition to the moment they park their car in the company lot at the end of the day. The premiums are significant, and that’s because the coverage is thorough. While taxi drivers do have a heftier amount of regulations to adhere to, arguably making them less competitive in the rideshare market, they and their cars are covered by authorities at all hours of everyday. Rideshare drivers are less regulated, and more or less left more to their own devices… literally. In fact, if a ride share driver is underinsured, there are consequences, varying from financial penalties to canceled policies altogether.

The Future of Rideshare Driver Coverage

Despite the continually growing popularity of ridesharing amongst users and drivers alike, there is still a lot of patience required of employees as the market evolves. The need for drivers to maintain all types of required coverage remains as individual states as well as rideshare companies work out the kinks and develop plans to best protect them. For now, it may feel like a conglomeration of puzzle pieces put together for total coverage, from the employer’s commercial offerings, to the driver’s personal policy plan, plus the rideshare add-on, but the hope is that in the future, a ride share driver’s coverage will be just as straight forward and thorough as a taxi driver’s.

Working in such a popular field of service, for well-known and well-to-do companies like Uber and Lyft, how are those drivers insured and protected? The terms “commercial insurance” and “ridesharing insurance” are often used interchangeably, however, there are some key differences in the way they work for America’s treasured ride share drivers

What is Commercial Auto Insurance?

First, let’s break down of the difference between types of insurance. Namely, commercial auto versus rideshare insurance. Commercial insurance policies are similar to regular plans in the nature of what they cover, however they are meant for vehicles used for professional purposes, not personal. These policies are thorough, 24/7 coverage plans with high premiums to match their quality. They require a taxi or a chauffeur license, and offer coverage for a driver and their vehicle while on or off the clock. Between the amount coverage and the amount of money they entail, commercial plans are often recommended only for drivers using their cars for work full-time or those looking to build a private clientele on their own. 

What is Rideshare Insurance?

Rideshare insurance looks different. It’s easy to think of rideshare insurance as a traditional personal policy, with an added ride share endorsement. Why the add-on? Let’s talk about the rideshare coverage gap. This term refers to the period after a rideshare driver turns on their app for work, but before a ride gets assigned to them. Uber and Lyft offer a form of commercial insurance that does not cover this period, but covers only from the point of assignment to the point of drop-off, making it difficult for a driver to rely solely on their employer’s commercial coverage. This is where rideshare insurance comes in. It fills in that gap, offering total coverage from clock in to clock out.

Technically, a driver looking to become employed by Uber or Lyft only needs a regular personal insurance policy; one that any normal driver might have. They might even seek out a coverage plan specifically for the self-employed, often offering appealing deals and discounts. However, a typical auto insurance plan won’t be keen to cover an incident occurring in the rideshare coverage gap, and that’s why it is often recommended for ride share drivers to get the ride share add-on. Some companies charge under $10-$15 per month for ride share insurance, while others charge 15%-20% of the existing premium.

The Difference Between Taxi Drivers and Rideshare Drivers

The key difference between a rideshare driver and taxi driver, is that taxi drivers tend to be regulated by state or local transportation authority, and are therefore highly regulated and heavily insured. Taxi drivers are required to be covered by commercial insurance, which means they are protected the moment they start their ignition to the moment they park their car in the company lot at the end of the day. The premiums are significant, and that’s because the coverage is thorough. While taxi drivers do have a heftier amount of regulations to adhere to, arguably making them less competitive in the rideshare market, they and their cars are covered by authorities at all hours of everyday. Rideshare drivers are less regulated, and more or less left more to their own devices… literally. In fact, if a ride share driver is underinsured, there are consequences, varying from financial penalties to canceled policies altogether.

The Future of Rideshare Driver Coverage

Despite the continually growing popularity of ridesharing amongst users and drivers alike, there is still a lot of patience required of employees as the market evolves. The need for drivers to maintain all types of required coverage remains as individual states as well as rideshare companies work out the kinks and develop plans to best protect them. For now, it may feel like a conglomeration of puzzle pieces put together for total coverage, from the employer’s commercial offerings, to the driver’s personal policy plan, plus the rideshare add-on, but the hope is that in the future, a ride share driver’s coverage will be just as straight forward and thorough as a taxi driver’s.

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Commercial Auto Insurance vs Ridesharing Insurance: What’s the difference?