The Definitive Guide to Rideshare Insurance

Working as a rideshare driver can be a great gig. You make more money, and get more freedom to choose your hours. However, these benefits can come at a price if you’re not careful, a financially catastrophic one at that.

When you start using your personal car for business operations, your insurance coverage no longer classifies your car as for “personal use” only. Because of the passengers you’re transporting, your insurance company may instead classify your car as a commercial vehicle.

Why is this a problem? Because your insurance provider can refuse to cover you in the event of an accident and you don’t have the right type of insurance. This could leave you paying out of pocket for both medical and vehicle expenses. And not just your medical and vehicle expenses, also those for all parties involved.

That’s a lot of money.

Fortunately, there is a way to avoid this. It involves using a specialized policy called rideshare insurance.

In this article, I’ll show you why you need this unique policy, a list of insurance companies that offer it, and also what to look for when shopping around.

Why Special Insurance Is So Important For Drivers

In the past, insurance companies didn’t want to cover rideshare drivers at all. If you told your auto insurance provider that you were driving for Uber or Lyft, the chances were that they would drop your policy. However, as ridesharing companies have gotten popular, insurance companies are less likely to follow this course of action.

While researching this article, we interviewed Michael Albert, an experienced rideshare driver, and he shared with us this story.

When he signed up to work for Lyft and Uber, he did the sensible thing and told his insurance agent, to ensure he would be properly covered. While his car insurance company was okay with this development, his agent made it clear to him in writing that his personal auto policy wouldn’t provide any coverage during the times that he was working for a rideshare company. At these times, Michael would have to rely on the coverage offered by the rideshare company he worked for.

But if you take a look at the policies that transportation network companies (TNC’s) like Uber and Lyft provide their drivers, you’ll find that unless a driver is on their way to pick up a passenger, or already has a passenger in the car, the TNC insurance won’t cover all expenses.

This means if you’re switched into driver mode in your ridesharing app, waiting for a passenger request to come in, your personal auto policy will not cover you. The liability coverage you have from your TNC is very low. This is a “coverage gap”.

A rideshare insurance policy is a specialized form of policy that narrows this coverage gap, allowing drivers to be covered during every step of the rideshare process, and have peace of mind.

safeco rideshare insurance gap illustration

Image Credit: Safeco Insurance

 

What Does Rideshare Insurance Cover?

To understand what you get from rideshare insurance we need to look into the coverage gap more.

When you’re driving your car for personal use, you’re protected by your personal insurance coverage. However, this stops once you log into the rideshare app, be it Uber or Lyft.

Once you switch on the app and are waiting for ride requests, you’re no longer covered by your personal insurance policy, so you should be covered by the TNC insurance, right?

Not necessarily so. During this period, known as Period 1, TNCs either offer no coverage or your coverage might be vastly reduced, leaving you vulnerable if you get into an accident. You could be stuck paying for the cost of vehicle damages and medical expenses for all parties involved. Not a situation you want to be in.

Rideshare insurance eliminates this coverage gap. It’s designed to provide coverage during this open period, so that if an accident does happen, you, your personal property, and the other party all have adequate insurance.

Additionally, if you’re not happy with the coverage limits that your TNC offers (more on that below), rideshare insurance gives you the option to have higher coverage limits and lower deductibles.

What Uber and Lyft Insurance Provides Drivers

Before we discuss what TNC policies cover, we need to define the different “insurance coverage” stages a driver may find themselves in. There are four stages of a driver’s average workday.

Period 0

Most drivers are familiar with this: daily routine trips that have nothing to do with ridesharing. Personal insurance typically covers this timeframe. For the sake of this article, this is referred to as Period 0.

Period 1

The next stage, when a driver has logged into the app and is waiting for a ride request, is when drivers are the most vulnerable due to the coverage gap we mentioned above. This is Period 1.

Period 2

Once a driver receives a ride request and is en route to pick up the passenger, he enters Period 2. Here the insurance offered by TNCs expand to cover more expenses.

Period 3

After the driver reaches the pickup point and picks up the passenger, they enter Period 3. Here they are fully covered by the ridesharing company’s insurance policy.

In the table below, you’ll see what Uber and Lyft insurance would provide you in the case of an accident.

Company Coverage limits in Period 2 & 3 Liability limits in Period 1 Collision coverage Deductible
Uber $1 million $50,000 per person, $100,000 per incident $50,000 (only with passengers) $1,000
Lyft $1 million $50,000 per person, $100,000 per incident $50,000 (only with passengers) $2,500

Even though Uber and Lyft provide liability and collision coverage of up to $1 million, the deductible for the coverage can be quite steep.

Often drivers have to pay a lot out of pocket when they get into an accident before insurance kicks in. As we mentioned above, rideshare insurance can help with this. It usually reduces to a more reasonable amount.

How Much Does Rideshare Insurance Cost

How much rideshare insurance will set you back depends on:

  • The number of miles you drive
  • Your driving record
  • The amount of coverage you’re purchasing
  • The insurance company you choose.
  • The city you drive in
  • The season you purchase your insurance
  • And much more

Depending on these, a rideshare policy can cost you $6 to $20 per month. I’d argue this a small price to pay for the peace-of-mind the added coverage will grant you. I’ve found that rideshare coverage purchased as an add-on to your existing auto insurance policy or as a new hybrid policy to replace your current coverage doesn’t usually result in a significant increase in your premiums.

It goes without saying that any time you’re purchasing insurance, even rideshare insurance, it’s a good idea to shop around and see the different options before making a decision.

Rideshare Insurance Options

Rideshare coverage is the perfect balance between personal and commercial insurance. This type of insurance provides drivers with the protection they need to bridge the coverage gap. It’s also less expensive on average than commercial insurance premiums: according to Trusted Choice, the average commercial auto policy for a passenger car costs $1200 to $2400 per year or higher.

Unfortunately, rideshare coverage is not available in every state, nor do all insurance companies offer it. Rideshare insurance providers typically charge $50-$100 extra per year for the coverage.

Rideshare Insurance Providers

To find out if your preferred insurance company offers rideshare coverage in your state, review the following list, or explore our more comprehensive list of rideshare insurance options.

Metromile (Our Favorite)

Over the years, plenty of the big players in the insurance game have created their own rideshare insurance policies geared towards Uber and Lyft drivers. But one that stands out among the rest is a new company called Metromile.

Metromile offers insurance policies that have premiums based on how much you actually drive, not a recurring monthly sum. Drivers pay a low base rate, then just pennies for every mile they drive. It’s a great way to save money while still enjoying robust benefits like rental reimbursement, emergency roadside assistance, low deductibles, and so much more.

Metromile is a company we HIGHLY recommend checking out. Get a quote today to see how much you can save.


Allstate Rideshare Insurance

Dubbed the Allstate Ride for Hire, this rideshare coverage can be added to your current insurance plan for about $15-$30 a year.

States Where Allstate Rideshare Insurance is Available
Arizona, California, Colorado, Georgia, Iowa, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Michigan, Nevada, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Utah, Washington, Washington D.C, and Wisconsin


Erie Rideshare Insurance

Although Erie insurance has traditionally excluded coverage for taxi drivers, they have made an exception for rideshare insurance. Erie offers rideshare insurance, in addition to personal premiums, as a monthly fee that varies between $9-$15.

States Where Erie Rideshare Insurance is Available
Illinois, Indiana, Kentucky, Maryland, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, Washington D.C, and Wisconsin


Farmers Rideshare Insurance

Offering drivers rideshare insurance across more than half the United States, Farmers rideshare insurance comes at a hefty price: 25% more than your current rate. This estimation is gleaned from the estimated increase in the personal property involved, which increases by approximately 1.25%.

States Where Farmers Rideshare Insurance is Available
Arkansas, Arizona, California, Colorado, Georgia, Iowa, Indiana, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Tennessee, Texas, Utah, and Wisconsin


Geico Rideshare Insurance

Geico offers rideshare coverage under the Geico Commercial plan. On average, drivers are charged about three times the rate of personal coverage alone.

States Where Geico Rideshare Insurance is Available
Alabama, Arizona, Colorado, Connecticut, Delaware, Georgia, Iowa, Indiana, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Virginia, Vermont, Washington, Washington D.C, Wisconsin, and Wyoming

Related: Does Geico Offer Gap Insurance?


Metlife Rideshare Insurance

For Metlife, rideshare insurance is all about how many miles were driven during any given month. Due to this, the average monthly premium drivers are billed will vary according to the time that they spent on the road. Currently, Metlife Auto & Home insurance is available in almost every state.

States Where Metlife Rideshare Insurance is Available
Almost all states


Progressive Rideshare Insurance

Favoring Lyft, Progressive’s rideshare insurance is currently only available in Texas. Progressive considers rideshare insurance as a personal policy. In theory, this means that insurance rates remain unchanged once they know about your business operation, however, no official estimation has been established.

States Where Progressive Rideshare Insurance is Available
Michigan, Pennsylvania, and Texas

State Farm Rideshare Insurance

State Farm has defined rideshare insurance as an extension to personal policies. Due to the distinct declaration, the coverage should, in theory, be moderately priced.

States Where State Farm Rideshare Insurance is Available
Alabama, California, Colorado, Connecticut, Delaware, Georgia, Iowa, Indiana, Indiana, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Nebraska, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Washington, West Virginia, and Wisconsin


Travelers Rideshare Insurance

Defining rideshare coverage as a modified personal policy, Travelers only offers insurance for rideshare drivers in CO and IL. More information about Travelers rideshare insurance may be reviewed under their “Optional coverages” section.

States Where Travelers Rideshare Insurance is Available
Colorado and Illinois

USAA Rideshare Insurance

Providing coverage to a selective group, USAA rideshare insurance adds about $6 a month to regular insurance policies. Select drivers include those who have served in the military or are related to a current USAA member as a partner or child.

States Where USAA Rideshare Insurance is Available
Alabama, Arizona, California, Colorado, Georgia, Iowa, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon, Tennessee, Texas, Washington, and Wyoming

How to Evaluate Rideshare Insurance Options

With all the different options out there, how do you find the policy that’s right for you?

Just like with personal auto policies, the cost of your insurance will vary based on the make, model, and year of your car. Jeeps tend to have a lower monthly premium due to their solid safety features, while luxury car brands like Mercedes Benz, tend to be more expensive due to the increased cost of parts and repair.

Another factor that affects is the historical statistics of the make and model of your car. This takes into account the likelihood of your car getting stolen and the chances of it getting into an accident, based on real-life data.

Read: What to Expect from an Uber Vehicle Inspection

Secondly, insurance rates come in tiers.

This is best illustrated with an example. Liability-only insurance is an attractive option for those on a budget, but it’s cheaper because the policyholder is not personally covered in the case of an accident, something many buyers are unaware of. Because of this, many drivers find themselves paying for their medical and vehicle expenses out of pocket.

With those two things in mind, as a business owner, you need to assess whether you want to bear the risk of having to pay such a high amount all at once in exchange for avoiding higher monthly premiums. For some businesses, such a high cost would bankrupt their business, while for others it’s worth bearing that risk as they have a war chest tucked away.

Only you know what’s right for you.

Finally, a way you could save on the cost of insurance would be to combine insurance policies. Quite a few insurance companies offer a lower rate to customers who consolidate their car and home insurance together into one monthly payment. Contact your insurance provider for more information.

Find an optimal balance between paying a high premium and a deductible you’re comfortable with in order to stay safe and profitable. A lower monthly premium can be appealing, but having to pay $1,500 or more out of pocket before insurance kicks in could cripple you if it happens at just the wrong time.

Frequently Asked Rideshare Insurance Questions

Friends discussing rideshare insurance options

What Should I Do If Rideshare Insurance Is Not Available in my State?

Unfortunately, rideshare insurance is not available in every state. Drivers in such locations should contact their insurance providers and ask about rideshare coverage.

If they are unable to provide the coverage you need, consider purchasing commercial insurance as a last resort.

Isn’t Personal Insurance Enough?

No, personal auto insurance is not enough to cover rideshare drivers.

Utilizing your vehicle as a business technically means it falls under commercial regulations. In other words, you, your vehicle, and your passengers may not be covered in the case of an accident. This can lead to lawsuits that could cause you financial hardship or even bankruptcy.

Do I Need to Tell My Insurance Provider If I Drive for A Rideshare Company?

It is highly recommended that you inform your insurance company that you drive for a rideshare service. If you don’t, one of two things could happen. First, your insurance provider could find out anyway and then cancel your personal policy. In the second scenario, you get in an accident while driving as for Uber or Lyft and they find out. In this scenario it’s highly likely they’ll refuse to cover the accident, leaving you liable for vehicle and property damages, and medical expenses.

Some companies favor Lyft over Uber and may offer discounts accordingly. Nevertheless, always let your insurance provider know how you are using your vehicle.

Are Rideshare Claims Filed Differently Than Personal Ones?

Usually not. Uber requires drivers to send them an email if an accident occurs, whereas Lyft wants you to contact them by phone.

Make this the first step you take after an accident only if it occurred during the timeframe between accepting a ride request and dropping the passenger off. Remember that during this period, the insurance provided by your transportation network company is your primary provider. Wait to call your main insurance afterward.

If the accident occurs at any other time, contact your main auto insurance company first. They are considered your primary insurance in this situation.

What Do I Do If I Get into an Accident Without Rideshare Insurance?

The consequences of getting into an accident while waiting for a ride request can be financially devastating, especially if your insurance company does not know how you are using your vehicle. In the event that your insurance provider does not cover the accident, the coverage from Lyft and Uber will start to take effect.

Unfortunately, the coverage provided in this situation is relatively low and is liability only, which can leave you footing the bill for all of your expenses. If the accident occurs between accepting a ride request and dropping a passenger off, Uber and Lyft will cover up to $1 million in damages. Although this amount covers medical and vehicle expenses, the deductible can be financially unbearable for many.

Is Rideshare Insurance Required to Drive for Uber or Lyft?

Many states require that drivers procure rideshare insurance to cover the coverage gap between turning on the rideshare app and getting a ride request. Although this is the safest option for drivers, the insurance offered by Uber and Lyft is sufficient to start driving with them.

Which Rideshare Insurance is the Most Cost Effective?

On average, USAA and Allstate offer customers the lowest rates. This does come at a disadvantage. The low rates offered by more affordable providers often come with high deductibles.

For example, paying a low monthly rate in exchange for having to pay $4,500 out of pocket to cover damages in an accident can be an extreme financial burden. Due to this, the rate offered by insurance companies may not be the most financially responsible option for you.

Are Passengers Covered in an Accident?

Yes. The $1 million coverage offered by Uber and Lyft will cover any medical bills your passengers accrue.

I’ve heard that coverage options are improving for rideshare drivers. Is that true?

Yes. As rideshare companies have been growing in popularity, insurance companies have been reacting to the market, realizing that their customers have new needs. To get a sense of where things might go, let’s look at how the situation has evolved.

A few years ago, if you as a rideshare driver wanted to ensure you had adequate coverage, and not get dropped by your existing provider, you had to purchase commercial car insurance. Yet, these policies weren’t designed specifically for rideshare drivers, so provided more coverage than you needed, costing you money you didn’t necessarily need to spend.

Another problem with commercial policies? They only covered drivers when using their vehicles for work. A separate policy was needed to cover the car when being driven for personal use.

Over time, a few insurance companies started to allow rideshare drivers to be covered, although this coverage didn’t extend to when driving clients. This is the type of coverage Michael was talking about earlier on in this article.

As time went on, some providers allowed customers to purchase policies that were supplemented with rideshare endorsements. If you wanted this extra coverage, or you wanted to ensure you didn’t lose your coverage in the wake of an accident, you had to switch to one of these carriers. This was a hassle. Often people save money by bundling their car insurance with other policies such as home, renters, or life insurance. Rideshare drivers would need to switch their other policies in order to keep costs down.

Today things are easier, several major can insurance providers offer this specialized coverage. There is one problem: not all states have friendly legislation for rideshare insurance, so this coverage is unavailable to residents of those states. Hopefully, this will change in the future.

Our Take

You need rideshare insurance when driving for Uber, Lyft or any other TNC for that critical coverage you get while you are waiting for a ride request. Although you may have to pay an additional monthly fee for this, you won’t regret that added amount of money if you are ever in an accident. Not to mention the peace of mind you’ll get.

If you can, keep the amount of your deductible saved up (and a bit more). It’ll help you get back on the road faster, earning fares, regardless of whether you were at fault or not during an accident. After most accidents, you won’t be able to drive. Not just because you need to recover, but because TNCs have a cooling off period while they investigate the accident, and whether your car needs another inspection. This can affect your income, so make sure you have enough saved to handle this.

What’s your take on rideshare insurance? Do you have any positive/negative experience with any of these providers? Share your experiences in the comments below!

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