The Ultimate Guide to Understanding Rideshare Insurance 

Rideshare car insurance is a type of insurance that is designed specifically for drivers who use their personal vehicle to provide ridesharing services like Uber or Lyft. 

This type of insurance typically covers both the driver and the passengers, and it can help protect you from any potential liability in the event of an accident.

If you are thinking about becoming a rideshare driver, it is important to make sure that you have the right type of insurance in place. 

The right option can provide you with peace of mind while you are on the road, and it can help protect you from any potential liabilities that may arise.

Does Personal Car Insurance Cover Ridesharing?

If you are using your personal car to provide ridesharing services, your personal car insurance policy will likely not provide any coverage. 

Most personal car insurance policies exclude any type of commercial use, which includes ridesharing. 

This means that if you are in an accident while providing ridesharing services, your personal car insurance policy will likely not pay for any damages. 

To better understand why personal car insurance and ridesharing don’t mesh well, keep reading. 

Why Do Personal Car Insurance Policies Not Cover Ridesharing?

The reason that personal car insurance policies do not cover ridesharing is that it is considered to be a commercial activity. 

When you use your personal car for commercial purposes, you are increasing the risk of an accident occurring. 

This is because you are picking up and dropping off passengers on a regular basis, which increases the chances of an accident happening.

Personal car insurance policies are not designed to cover commercial activities like ridesharing. If you want to be covered while providing ridesharing services, you will need to purchase a rideshare car insurance policy.

What Does Rideshare Car Insurance Cover?

Rideshare car insurance is designed to cover the driver and the passengers in the event of an accident. 

This type of insurance can help to protect you from any potential liabilities that may arise, such as medical expenses or property damage. 

Rideshare car insurance can also provide coverage for any damages that are caused by unlicensed or underinsured drivers. 

Personal car insurance simply doesn’t extend the same coverage, making you more liable for any issues that arise. 

How Rideshare Insurance Works

Many rideshare insurance policies are built on a specific system that covers drivers when driving in conjunction with their normal insurance. 

Some of these insurance options can be purchased directly from a rideshare company like Uber or Lyft or through the same company as your personal provider. 

Here’s how many of them are designed:

Period 0 (Offline or the Driver app is off)

When not working in a rideshare capacity, a personal insurance policy is primary coverage for a driver and their vehicle.

Period 1 (Available or waiting for a ride request)

If you’re waiting for a client, but do not have a rider in your car, your personal insurance covers you.

Period 2 (En route to pick up riders)

As soon as you agree to a request and start driving to pick up your riders, the rideshare company has got you fully covered.

Period 3 (During trips)

The rideshare company you drive for covers all damages while you are on the clock, aka when you’re giving a ride.

Delivery driving, though slightly different, has a similar structure for determining coverage. You’ll need to check with your insurance provider on how delivery driving affects your insurance. 

What Does Rideshare Car Insurance Cost?

The cost of rideshare car insurance will vary depending on a number of factors, such as the insurer, the amount of coverage, and the driver’s driving history.

Because there is an increased liability, you can expect it to be more than any personal option. 

According to NerdWallet, averages for mega-insurers like Statefarm can range from 15-20% above a traditional auto insurance policy. 

In some cases, that can mean up to $10 more a month, while in others, it can be as much as $20 or more per month in additional fees. 

How to Purchase Rideshare Insurance

Not all insurance companies provide both private and commercial auto insurance. Instead, you might need to shop around and find a commercial provider separate from your primary provider.

While you may choose to default to providers partnered with your rideshare app, you can also shop around for a policy that works for you.

From there, you’ll need to follow a few steps to get the coverage you need. 

  1. Speak with your personal policy insurer and inform them that you will be driving for a rideshare company. This is necessary as failure to tell your original policy provider about your rideshare position can nullify that coverage. 
  2. Your insurance company should be able to help you identify any gaps in your coverage, or you can read the fine print on your policy to learn more. 
  3. With that gap information, begin shopping around for other rates. You can check with your personal insurer to see if they also offer commercial/rideshare rates or look for a 3rd-party insurer. In any case, you’ll want to get as many quotes as possible to compare for the best deal. 

What to Do if You’ve Been in a Car Accident

If you’re in a car accident while ridesharing, you’ll treat the process much like any other car accident. 

(1) If you’re in an accident while working, particularly with passengers, the first thing to do is ensure that everyone is okay. Assess the situation.

(2) Then, call 911 if necessary.

(3) Contact Uber support to submit a crash report or to receive other support.

(4) Contact your insurance company or companies for the next steps.

The Takeaway for Drivers

Gig working comes with its fair share of complications, and making sure you have the right car insurance is one of them. 

The last thing you want to do when you’re ridesharing is put yourself at greater financial risk by working without the right coverage. 

Be sure to take the time upfront necessary to find the policy that fits your personal and business needs, even if it means stacking policies to make sure you’re completely covered.