The Definitive Guide to Rideshare Insurance

We can all agree that working as a rideshare driver is a pretty lucrative and convenient profession. The freedom of this type of work combined with a hefty salary can be irresistible, at first glance.

But when drivers transform a vehicle into a business operation, the automobile is no longer considered to be for “personal” use only.

Instead, due to the additional assets a driver is transporting, insurance companies typically classify the automobile as a commercial vehicle.

Also see: How Much Do Uber Drivers Make?

Because of this, drivers are required to upgrade their insurance coverage accordingly, and choosing to ignore this fact can be financially catastrophic.

How so?

If you are in an accident while on the job and do not have proper coverage, your insurance company can legally refuse to file your claim. Being in this type of situation can leave drivers paying for both medical and vehicle expenses completely out of pocket.

To offset the liability of this looming threat, drivers must find insurance that is specifically designed to cover rideshare services.

Fortunately, our team has spoken to dozens of experts and conducted countless hours of research into learning about rideshare insurance. We’ve shared our findings below:

 

Why Special Insurance Is So Important For Drivers

First, some insurance companies do not want to cover rideshare drivers at all—though this has been changing as rideshare programs have been increasing in popularity. Others can drop your coverage if they discover that you have been working as a rideshare driver without having disclosed this information to them.

Michael Albert, an experienced rideshare driver we interviewed, said when signed up to work for Lyft and Uber, he spoke with his insurance agent to inform him that he was doing this job and to ensure that he was properly covered.

His car insurance company was okay with this, though his agent made it clear to him, in writing, that his policy would not provide any coverage during the times that he was working for a rideshare company.  During those times, he must rely on the coverage offered by the rideshare company he works for.

If we take a look at the policies that TNC companies provide their drivers, we find that unless a driver is on their way to pick up a passenger (Period 2), or already has a passenger in the car (Period 3), the TNC insurance won’t cover all expenses.

In short, if you’re just sitting or driving, in driver mode, waiting for a request to come in, your personal insurance will not cover you, and the liability that TNC insurance covers is very low. This is a called a “Coverage Gap”.

Rideshare insurance narrows this coverage gap, allowing drivers to be covered during every step of the rideshare process.

 

What Does Rideshare Insurance Cover?

Let’s take a more in-depth look at the Coverage Gap.

When you are driving your vehicle for personal use, regular insurance has you covered. However, personal insurance coverage stops once you log into your rideshare app.

When this occurs, the insurance offered by transportation network companies kicks in. However, this rideshare insurance is liability only during the time you are waiting for a request. Generally, the TNC policy offers minimal coverage during this time.

If the driver gets into an accident between turning on the rideshare app and getting a ride request, the incident will fall into this very expensive coverage gap, leaving drivers to possibly be stuck paying for the cost of their vehicle damage and medical expenses out of pocket.

Rideshare insurance is designed to eliminate this gap in coverage. It ensures that should an accident occur, you, your personal property, and the other person all have adequate coverage.

safeco rideshare insurance gap illustration

Image Credit: Safeco Insurance

 

What Uber and Lyft Insurance Provides Drivers

There are four stages of a driver’s average workday.

Most drivers are familiar with the first one: daily routine trips. Personal insurance typically covers this timeframe.  This is referred to as Period 0.

The next stage, when a driver is waiting for a ride request, is when drivers are most vulnerable. This is where personal insurance no longer applies and liability-only coverage starts. This is referred to as Period 1.

Once a driver receives a ride request, and is en route to pick up the passenger, the insurance offered by transportation network companies expand to cover more expenses. This is referred to as Period 2.

After the driver reaches the destination and picks up the passenger, they are now entering Period 3.

Uber and Lyft provide liability and collision coverage of up to $1 million on average. Although this hefty amount is usually adequate, the deductible for the coverage is steep.

When drivers get into an accident, they oftentimes pay a lot out of pocket before insurance kicks in. This is another area that rideshare insurance comes in handy. Rideshare coverage usually reduces the high deductible to a much more reasonable amount.

 

How Much Does Rideshare Insurance Cost

Rideshare insurance can cost policy-holders an additional $6 to $20 per month depending on the number of miles you drive, your driving record, the amount of coverage you are purchasing, and the insurance company you choose. This is a rather small price to pay for the peace-of-mind this added coverage can afford you.

These figures give you a general idea of what other drivers have paid recently, but the actual rideshare insurance cost depends on a wide variety of factors including your personal history, the day you acquire the premium, city you drive in, and more.

From personal experience, what I’ve found is that rideshare coverage as an endorsement on your already existing auto insurance policy or as a hybrid policy to replace your current coverage doesn’t usually result in a significant increase in your premium costs.

Any time you are purchasing insurance, it is a good idea to shop around and see the options that you have available to you before making a decision about your coverage.

 

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.

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.

Allstate Rideshare Insurance

Dubbed the Allstate Ride for Hire, this rideshare coverage can be added onto 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
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

Car insurance rates vary based on the make, model, and year of your vehicle. Jeeps, for example, typically have a lower monthly premium due to the vehicle’s solid safety features, such as multistage airbags and electronic roll mitigation.

Other vehicles, such as a Mercedes, can be much more expensive. This is typically due to the increase in the cost of parts and repairs.

Other contributing factors include the probability of a vehicle getting stolen and the known accident history of a specific type of vehicle across the industry.

Read: What to Expect from an Uber Vehicle Inspection

Insurance rates also come in tiers.

For example, liability-only is much lower than other insurance options due to the fact that the policyholder is not personally covered in the case of an accident. Due to this often-misrepresented insurance, many drivers find themselves paying for their medical and vehicle expenses out of pocket.

Evaluating whether or not the risk of having to pay such a huge amount all at once in exchange for avoiding the higher monthly premium is entirely up to you as a business owner.

Combining insurance policies can be another great way to save on insurance. Many insurance companies offer a lower rate to customers who put their automobile and home insurance into one monthly bill. To find out more about how to further reduce your monthly insurance policy, be sure to ask your insurance provider for more information.

Finding the optimal balance between paying a high premium and a low deductible is a great way to stay safe and profitable. Although paying a lower monthly premium is very appealing, having to pay $1,500 or more out of pocket before insurance kicks in can be devastating.

 

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 leave you in a painful financial strain, 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. Doing so protects you and your business from potentially catastrophic dilemmas like accidents that lead to vehicle damage 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.

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 programs have been growing in popularity, insurance companies have been adapting to meet the changing needs of their consumers.

Just a few short years ago, if rideshare drivers wanted to ensure that they had adequate coverage with insurance companies that would not drop them for doing this job, they needed to purchase commercial car insurance.

However, these policies, which are not really designed for the specific needs of rideshare drivers, provided more coverage than they actually needed—at a cost that was higher than they ought to have been paying.

Also, commercial insurance only covers drivers when they are using their vehicles for work, so a separate policy was needed to cover the car when it was being driven for personal use.

As time went on, a few insurance companies started allowing rideshare drivers to be covered, though their terms and conditions stated that they would not be covered while driving clients. This is the type of coverage Michael has.

Later, some providers started enabling customers to purchase policies supplemented with rideshare endorsements. Lyft and Uber drivers who wanted this extra coverage, or who wanted to ensure that they would not lose their coverage in the wake of an accident, typically had to switch to one of these carriers.

This was often a hassle, and because many people earn discounts buy bundling their car insurance with other policies, such as home, renters, or life insurance, they needed to switch their other policies as well to avoid a financial loss.

Today, several major car insurance providers offer this specialized coverage and this makes things much easier for many rideshare drivers.  One caveat, however: some states still do not have rideshare insurance-friendly legislation, so this coverage is not yet available to their residents.

Our Take

Rideshare insurance is an essential aspect of driving for companies like Uber and Lyft. The extra coverage ensures that you are covered while you are waiting for a ride request. Although you may have to pay an additional monthly fee to have rideshare coverage, the added amount will prove worthwhile if you are ever in an accident.

Drivers should consider keeping the amount of their deductible saved up. Doing so will make it possible for drivers to get back on the road faster, regardless of whether or not they are at fault during an accident. After most accidents, there is a timeframe where driving is simply not an option. This can take a heavy toll on your income, so plan accordingly.

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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