Rideshare Insurance: What It Is And Why You Need It

When rideshare drivers first sign up to drive, they want to get on the road as soon as possible. But oftentimes in the rush they overlook one critical component that is a virtual necessity for every driver: rideshare insurance.

Is this really necessary? Don’t rideshare companies like Uber and Lyft provide commercial insurance to drivers? Well, yes they do. BUT…

… there are large holes in coverage (times/areas) that could leave rideshare drivers with a very high risk of damage, money, and liablity.

How Rideshare Insurance Can Protect You

And today we’re going to discuss the most basic elements of rideshare insurance. Before we’re done, you’ll get a better understanding of the following:

  • Coverage Periods
  • The “Coverage Gap”
  • Coverage Types

Let’s dive right in.

Coverage Periods

Before we dive into how drivers are at risk with the normal commercial policy provided by TNC companies, we need to define a few timeframes, or “Periods” that are used to determine the coverage that applies to an accident.

These periods are broken up into three distinct categories, and apply to the different activities drivers are partaking in.

  • Period 1: Driver is logged into the app but waiting for a request
  • Period 2: Driver has a request and is en route to pick up a passenger
  • Period 3: Passenger is in the car and en route to destination

While coverage technically applies to almost every one of these periods, the coverage provided between Period 1 and Period 2 leaves room for leaks, and is significantly lower than during Period 2 and 3.

A driver’s personal auto policy stops covering them once they flip into driver mode, but since they haven’t yet been matched with or picked up a rider, the TNC commercial policy hasn’t been fully enabled either. Comprehensive coverage (TNC provided) kicks in during period 2 and ends after period 3, or whenever the passenger is dropped off.

When this happens, it’s referred to as a “Coverage Gap”.

Related: How Uber Car Insurance Works In An Accident

The Coverage Gap

As we outlined above, when a coverage gap between personal and commercial policy occurs, the amount of expenses covered by either policy is significantly less than in Periods 1, 2, or 3.

If a driver were to get into an accident during this period, the company that owns the personal policy could claim an exclusion, and the TNC company may only cover some expenses instead of the majority of them. This, essentially, leaves drivers at risk.

There are additional policies offered by insurance companies to cover drivers specifically during this time, and they aren’t as expensive as you would think.

It’s worth noting that if you get into an accident without an additional rideshare insurance policy, you open yourself up to a huge range of liability options that could end up causing you an enormous headache and possibly even a dent in your bank account.

For example, if you were to get into an accident while rideshare driving, does your insurance cover…

  • costs with accident-related injuries and damage to you or passengers?
  • physical injuries and property damage to other drivers and people on the road?
  • repairs and replacements of costs on your vehicle?

The easiest thing to do is to simply purchase an additional policy specifically for rideshare drivers.

Types of Rideshare Insurance Policies

But what type of rideshare insurance do drivers need to be protected?

Insurance companies today are adapting to the growing transportation industry, and offer a few different types of rideshare insurance policies. They cover a wide spectrum, but the two most common types are Gap Coverage and Full Coverage.

1. Gap Coverage Policies

Drivers that understand the insurance gap may opt for a Gap Coverage rideshare insurance policy.

This type of policy is fairly basic, but focuses on reducing the liability between Period 1 and Period 2, narrowing the coverage gap. Gap Insurance offers excess coverage that expands what drivers receive from an Uber or Lyft policy in Period 1.

Policies like these are oftentimes very affordable and are available in quite a few states nationwide.

2. Full Coverage Policies

The other popular rideshare insurance policy type is a Full Coverage policy. This type of policy is most like a commercial insurance policy and covers a wide range of coverage options. These include basic coverage, along with excess coverage for the areas above outlined during Periods 2 and 3.

In addition, some companies will even cover the difference in the physical damage deductible on the driver’s personal policy and the deductible on the TNC policy in those two periods.

Key Takeaways

There’s a lot to learn about rideshare insurance, but one thing remains true: all drivers should have a rideshare insurance policy before they get on the road, otherwise they open themselves up to enormous risks.

The main things you need to know about this insurance are:

  • It’s important to understand the differences between your personal insurance policy and a TNC-provided policy
  • Oftentimes there is a coverage gap between your personal policy and your TNC-provided policy, which highlights a need for an additional policy
  • Depending on where you drive, rideshare insurance may not be available. In addition, your personal insurance company may not offer this type of insurance

Still Confused?

Still confused about rideshare insurance and coverage? We’ve tried to outline it all, but sometimes it’s better to talk to a professional.

If you’re an Uber or Lyft driver in New Jersey or Pennsylvania, consider talking to Plymouth Rock Assurance. They have lots of insurance pros who are ready to talk to you and explain, in detail, how you’re covered should you get into an accident.

They can you answer questions like:

  • Will my coverage help me with deductible costs on the Uber- and Lyft-provided insurance policy?
  • How much does rideshare insurance cost?
  • Does rideshare insurance provide me with comprehensive and collision coverage?
  • Does it matter which transportation network company I work for?

You can get in touch with Plymouth Rock at 855-993-4470, or visit them online at www.plymouthrock.com/rideshare.