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Rideshare Driver Coverage: Options for Uber and Lyft Drivers

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Uber and Lyft drivers may not be covered if they’re in an accident while driving for a Transportation Network Company (TNC). TNC includes Uber, Lyft or any other company that a driver connects to via a mobile app and uses their personal vehicle to pick up passengers.

Your first course of action is to call your auto insurance provider to determine what coverage you need.

State Farm, for example, has a Rideshare Driver Coverage option. This option will:

  • Extend personal coverage to when you’re driving for a TNC
  • Extend coverage for medical, rental car, roadside assistance and emergency assistance

It’s coverage that lowers the driver’s risk of liability while driving for a TNC.

A lot of drivers never realize that they may need additional coverage to protect themselves and their passengers – it’s easy to overlook. But an insurer can refuse to pay out on a claim if you’re driving for a TNC without the proper coverage.

Different Laws in Different Places

Local laws can impact your insurance. A driver in Ontario will be under different laws than a driver in Washington. Ontario maps out their law perfectly for drivers, and it states that auto insurance will:

  • Provide coverage the moment the app is turned on
  • Offer coverage until the passenger exits the vehicle
  • Revert to personal insurance when the app is turned off

Ontario has approved auto insurance products from a list of ridesharing companies, including Uber, Lyft and numerous others. Drivers ought to view the list on the official Financial Services of Ontario website to ensure that they’re covered.

And even when a TNC offers insurance, the liability coverage is often very low.

This can be problematic. Let’s say, for example, you switched your app on and are waiting for a passenger request. If an accident occurs, since the app is on, your TNC insurance will cover the cost. Yet the insurance is more of a “gap insurance” than it is a traditional auto insurance.

But sometimes, often when the app is on and no passenger is in the vehicle, a gap will occur where you’re not covered by insurance.

Uber and Lyft Provide Insurance

Uber and Lyft do provide insurance, and while they do offer different limits, the deductible is steep. Uber’s deductible is $1,000 and Lyft’s deductible is $2,500. But coverage varies. Let’s say that the driver has reached a destination and picks up a passenger, they’ll be covered under a $1 million insurance policy.

But let’s say that the driver has turned on their app and is waiting for a request.

At this point, the driver is vulnerable because they’ll receive $50,000 per person in liability coverage. Collision coverage is only provided when a passenger is in the vehicle, so if another driver hits your vehicle, you’ll not be able to claim collision coverage under your policy.

You’ll have to wait for an entire investigation by the insurance company before being paid.

Your vehicle will be out of commission at this time.

Most large auto insurance companies will provide rideshare insurance, and this can be as cheap as $15 – $30 a year. Added to your current policy, this will extend your coverage so that you don’t suffer major losses in an accident.

Be warned: some insurance companies charge significantly more than others. Geico will require a Commercial Plan which is more than double the price of a personal plan. Farmers charges 25% of your current policy rate, while Allstate charges up to $30 a year for additional coverage.

Most drivers agree that it’s best to have their own rideshare coverage that extends their benefits to all stages of ridesharing.

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Rideshare Driver Coverage: Options for Uber and Lyft Drivers