Will My Insurance Company Cover Me If I Start Driving for Uber or Lyft?
Last Updated on October 24, 2020
How does car insurance work for Uber and Lyft drivers? Do you need special car insurance to drive for Uber or Lyft? Should you contact your insurance company and tell them you’re providing ride-sharing services from your personal vehicle?
These are all very good questions. Below, we’re answering every question you have about whether or not you’re covered if you start driving for Uber or Lyft.
Some Car Insurance Plans Provide Full Coverage, But Most Do Not
The short answer to the above questions is this:
If your car insurance plan has ridesharing coverage, then you’ll be fully covered while working for Uber, Lyft, and any other ride-sharing company. That means any damage to your vehicle, yourself, and passengers within your vehicle will be covered.
However, if you have a standard car insurance policy, then you probably will not be fully covered. Drivers with a standard insurance plan might only be covered against damage to their vehicle, while damages to themselves or their paying passengers will not be covered.
Confused? That’s okay. Let’s take a closer look at how it breaks down.
Most Insurance Policies Do Not Cover Ride-Sharing by Default
By default, very few car insurance policies will cover ride-sharing. Typically, this is a supplementary policy option only purchased by those who actively work for Uber or Lyft. Insurance companies have no reason to bundle this under an ordinary driver’s insurance policy because most drivers don’t work for Uber or Lyft.
Unless you’ve previously driven for monetary purposes – like running a private delivery business or similar company out of your own vehicle – you probably have a standard insurance plan. If you have a standard insurance plan, then you won’t be protected while driving for Uber or Lyft.
As of 2020, more and more insurance companies are offering ridesharing coverage. Below is a list of the insurance companies that offer ridesharing coverage and how much it costs:
- Allstate – $20 per year more than a traditional policy
- Erie Insurance – $9-$15 per month more than a traditional policy
- Mercury – $27 per month more than a traditional policy
- Safeco – $10 per month more than a traditional policy
- State Farm – 15-20% more than a traditional policy
- USAA – $6 per month more than a traditional policy
Uber and Lyft Cover Rideshare Drivers…But Only at Certain Times
Uber and Lyft both provide ridesharing insurance for drivers – but there’s a catch. They only provide insurance during “Period 2” and “Period 3”:
Period 2: Period 2 begins when you accept a ride request and begin driving towards the passenger who requested the ride.
Period 3: Period 3 begins when the passenger gets into your vehicle and ends when they exit your vehicle.
That means you’re not covered when you’re online and waiting for a request (i.e. when you’re in Period 1). During Period 1, you have no collision coverage from Uber or Lyft. You will have liability coverage (the bare minimum required to legally drive on the road), but Uber and Lyft significantly lower liability coverage during Period 1.
Uber and Lyft’s plans also have surprisingly high deductibles. If you get into a collision during Period 2 or Period 3, for example, you’ll be covered, but you’ll have to pay a high deductible to make a claim. Uber has a $1,000 deductible, for example, while Lyft has a $2,500 deductible.
It’s also important to note that you need to be running the app to receive coverage. If you’re not running the app, then you immediately lose all coverage from Uber or Lyft.
Ultimately, Uber and Lyft provide basic ridesharing insurance. However, both Uber and Lyft’s insurance options leave significant gaps in coverage. These gaps can be covered with ridesharing insurance available from traditional car insurance companies.
Most Major Insurance Companies Now Provide Ride-Sharing Insurance as an Option
The important thing to recognize here is that your insurance company can provide complete coverage while you’re driving for Uber or Lyft – but your existing policy probably doesn’t provide ridesharing coverage by default.
Uber and Lyft have exploded with growth across the United States. There are hundreds of thousands of drivers across the country. Insurance companies know they need to offer ride-sharing policies to compete – and that’s why all major insurance companies now offer ride-sharing policies.
Typically, ridesharing insurance will cost slightly more than ordinary insurance. When you get ridesharing insurance, your car will be protected despite the fact you use it for professional services.
There’s a catch: rideshare insurance isn’t yet available in all 50 states. It’s now available in most states and from most insurers – and the number is growing every month. However, your state might not have rideshare insurance.
Call your Insurance Company or Compare Quotes Online to Get the Best Uber or Lyft Insurance
If you’re currently insured and you’re happy with your coverage, then contact your car insurance company. Ask about ridesharing policy options. Adding ridesharing insurance to your policy might be cheap and hassle-free.
Alternatively, not all insurance companies offer ridesharing insurance. You may need to switch insurance companies to ensure you stay covered. Make sure you compare quotes online to get the best ridesharing car insurance for your unique needs.
Final Word on Insurance for Uber and Lyft
Uber and Lyft both provide basic insurance to drivers. However, that insurance is only active when you’re driving to pick up a passenger or have a passenger in the vehicle. If you’re waiting for a ride while the app is active, then you only have liability coverage. If you’re driving with the app offline, then you have no coverage whatsoever from Uber or Lyft.
Meanwhile, your existing car insurance policy will provide coverage at all times when not using the app – but standard car insurance policies don’t cover you while you work for ridesharing companies like Uber or Lyft. However, they do provide optional ridesharing policies that can be added to your plan.
Talk to your insurance company today to explore your ridesharing policy options. The vast majority of drivers will want to add a ridesharing policy to ensure complete coverage.