Did you know that your personal auto insurance policy and the coverage provided by Lyft or the policy provided by Uber don’t cover you for all potential accident situations?
If you’re like many rideshare drivers, this might surprise you.
Rather than remaining exposed to potential liability if you cause an accident while driving a passenger for a rideshare app, you probably want to purchase additional rideshare insurance.
In this article, you’ll learn everything you need to know about rideshare insurance and which carriers to compare when shopping for coverage.
If you drive for a rideshare company, you need to pay close attention to how auto insurance does and doesn’t protect you while you’re out on the road.
Commercial auto insurance, such as TLC insurance, usually costs more than personal coverage because of added risks involved with commercial driving.
When a rideshare driver decides to forego buying extra coverage because it carries a higher cost than their personal use policy, then there’s a “gap” in coverage that leaves them legally exposed.
What Is Rideshare Insurance?
As the name suggests, rideshare insurance is a form of commercial auto insurance especially suited to modern-day cab drivers called rideshare drivers.
Rideshare insurance covers the gap in coverage between the insurance Lyft or Uber provides its drivers and your personal auto insurance benefits.
Your car insurance doesn’t cover the use of your vehicle when driving passengers for a rideshare company.
Insurance from Lyft and Uber only covers you during specific times (which we’ll explain below).
It might not protect you from the amount of damage you can cause during an accident.
Is Rideshare Insurance Required?
Rideshare drivers don’t need to buy additional rideshare insurance since the law does not stipulate it as a requirement.
However, it’s a good idea to invest in rideshare insurance if you want to protect yourself from potential liability.
You need to ask yourself if you can pay for tens of thousands or hundreds of thousands of dollars in physical damage during an auto accident.
Drivers need rideshare insurance because it’s their responsibility to keep themselves and others safe on the road.
Rideshare companies shoulder the blame for a lot of auto accidents that happen.
They’re not legally obligated to pay for accident expenses until after entering the claims process.
If the claims process reveals that your personal auto policy or the rideshare company’s policy doesn’t cover you, then you’re in trouble.
If you’re an Uber or Lyft driver, you’re covered by the rideshare company’s insurance policy when you’re “on the clock.”
You’re “on the clock” when you accept a ride, drive to pick up a passenger, and complete a dropoff.
The coverage only lasts from when you accept a ride request to when you arrive at your destination.
You aren’t going to receive coverage during other situations while driving for Uber and Lyft.
Suggested Resource: How to handle an Uber accident
Auto insurance policies for rideshare drivers add additional costs to their regular coverage policies.
In exchange, drivers get a way to cover their liability should they get into an accident while driving for Uber or Lyft.
It’s best to purchase a comprehensive commercial policy tailored to cover your needs as a rideshare driver.
After all, you don’t want to shoulder all the risk when accidents occur.
Standard personal auto insurance doesn’t cover commercial use.
Rideshare covers the commercial insurance gap between your regular policy and the insurance provided by Lyft or Uber.
Commercial auto insurance covers damage to other cars, injuries to other people, and other property damage resulting from a car accident.
It also covers damage to your vehicle from commercial activities such as providing rideshare services.
Personal auto insurance sometimes subsidizes the cost for certain benefits, but commercial coverage will likely charge an additional fee for each of these included extras.
- Personal Injury Protection (PIP)
- Collision coverage
- Comprehensive
- Uninsured/underinsured motorist bodily injury
- Medical payments
Most premiums for rideshare insurance include Personal Injury Protection (PIP).
Collision and comprehensive claims are more expensive, depending on your driving record and other factors.
Rideshare insurance will likely charge an additional fee for these two types of claims due to the higher risk of accidents when you drive for Uber or Lyft.
Most rideshare insurance premiums include medical payments coverage, but it may not always stay the same amount as your personal insurance policy.
Rideshare companies usually have $1,000 to $5,000 worth of additional medical expenses coverage, depending on the state you live in.
Commercial auto insurance also typically has higher deductibles than your individual policy.
You’ll need to pay this greater deductible if you want rideshare insurance.
Does My Insurance Cover Rideshare?
Your regular personal auto insurance won’t typically cover you when you drive for Uber or Lyft.
You can purchase a rideshare insurance policy to provide additional coverage.
If you don’t, and an accident happens while driving for Uber or Lyft, your personal auto insurance won’t cover any expenses resulting from the incident.
Rideshare companies recommend that you carry an additional commercial rideshare insurance policy when driving for them.
Should I Tell Insurance About Rideshare?
Yes, you should discuss your ridesharing activities with your personal auto insurance carrier.
Your agent can provide you with a quote for additional coverage.
Suppose you don’t want to purchase rideshare insurance. In that case, many insurance companies provide a ridesharing endorsement that allows personal auto policies to extend their commercial coverage as you drive for Uber or Lyft.
You pay extra for the endorsement itself, and it covers accidents while driving for these services.
It’s typically cheaper than purchasing a separate commercial insurance policy.
Talk to your agent about the specific coverages and associated costs.
Does Ridesharing Increase Insurance?
Commercial use increases the risk of accidents, which results in higher premiums for drivers.
Rideshare insurance typically costs more than personal coverage because you’re driving passengers commercially instead of family members or friends.
Expect to pay more for auto insurance after adding commercial coverage to your personal policy.
To better understand rideshare insurance, it’s best to look at a standard policy for a personal vehicle.
When you purchase insurance from an auto insurer, you’re buying an agreement that you’ll receive monetary benefits when claiming on an auto accident.
You’re doing the same thing when buying rideshare insurance.
The difference is that you’re entering into an agreement that makes sure your liability remains covered if the accident occurs while driving passengers for Uber, Lyft, or other rideshare companies.
If you have assets such as cars or houses worth protecting from lawsuits, you should consider purchasing additional rideshare insurance.
Insurance Phases
Let’s look at the four phases of rideshare insurance:
Phase 0
Phase 0 means that you’re not providing the rideshare service, and your app is not on.
During this phase, you’re driving under the coverage of your standard auto insurance policy.
Neither Lyft nor Uber are involved at this stage because you’re not technically working for them.
Typically, you’re driving for personal needs during this stage.
You might visit friends, drop the kids off at school, go to buy groceries, or drive to and from your regular job.
An accident in Phase 0 won’t involve the coverage provided by a rideshare company or any additional rideshare insurance added to your policy.
Only your personal policy limits will apply if an accident occurs in Phase 0.
You’ll typically pay out any deductibles stated inside your personal policy if you get into an accident during Phase 0.
Most people have deductibles of $250, $500, or $1,000. Check your policy, so you know for sure what your deductibles are in your personal policy.
Phase 1
This phase starts when you turn on the app and you’re available for rides.
However, you haven’t accepted a ride yet.
You’re simply waiting to get a ride request from a passenger.
You’re probably parked somewhere during Phase 1 as you wait for rides.
Lyft or Uber will now pay out some insurance benefits if you get into an accident.
The amount they’re on the hook for is less than when you enter Phase 2 or 3 because you’re still not actively engaged in giving passengers rides.
Phase 2
In Phase 2, you’ve accepted a rideshare request and are on the way to pick up a customer.
You don’t have any passengers in your vehicle yet.
Phase 3
You enter Phase 3 after you pick up your passengers and are en route to their destination.
Uber and Lyft Insurance by Period
Period 0
Lyft and Uber don’t provide any insurance to you in Period 0.
Again, this period is when you don’t have the app on.
You’re driving your car for personal use.
Period 1
Uber’s Period 1 policy provides only $50,000 per person and $100,000 per accident in liability coverage.
The property damage limit here is $25,000 maximum per accident.
Lyft uses what’s called contingent liability coverage.
The coverage kicks in only if your personal policy denies your claim on the accident.
Remember that a rideshare company’s policy only pays out in Period 1 to cover the damage you cause to another driver.
You will need to pay any money required to fix your vehicle.
Or, if you cause more than $25,000 property damage or over $100,000 personal injury to someone, then you’ll need to pay the additional money.
Periods 2 and 3
Both Lyft and Uber provide up to $1 million in coverage during Periods 2 and 3.
One type of coverage is a third-party liability.
The rideshare companies pay for damage to a third-party person’s property or vehicle.
It’s just like the coverage provided in Phase 1, except it brings $1 million in coverage instead of $100,000.
You’ll also see that the rideshare companies give you “uninsured motorist” and “underinsured motorist bodily injury” coverage.
You’ll receive benefits if an underinsured or uninsured person causes an accident that hurts you or a passenger in your vehicle.
A third coverage provided in Periods 2 and 3 is comprehensive and collision.
Lyft or Uber pays for damage to your vehicle as a result of a collision.
The critical thing about these coverages is that they’re contingent coverages.
You must carry the same protection on your personal policy up to the same amount that the rideshare companies provide.
Delivery Driver Insurance by Period
Keep in mind that some delivery apps don’t provide any insurance to you.
For example, Instacart and Grubhub don’t give you insurance.
Postmates and DoorDash do provide insurance to you.
Period 0
Your personal policy covers you during Period 0 because the app is off.
The delivery company’s insurance doesn’t apply in this situation.
Period1
Period 1 occurs after you turn the delivery app on.
You’re logged on and ready to make a delivery.
Usually, your personal auto insurance policy no longer covers you in Period 1.
Unfortunately, the delivery app insurance doesn’t apply here, or it’s minimal.
Periods 2 and 3
You’ll enter Period 2 after accepting a delivery request on the app.
If your delivery company offers auto insurance coverage, it becomes activated during Period 2.
Period 3 starts after you pick up the food delivery at the restaurant.
The food delivery app coverage remains in place until you deliver the food to your customer.
Postmates and DoorDash both offer $1 million in third-party liability coverage.
The insurance doesn’t apply unless your policy can’t cover all the damages.
Let’s discuss specific auto insurance companies that offer rideshare insurance.
You’ll learn the pros and cons of each carrier, the prices offered, and where they offer coverage for rideshare insurance.
USAA
Why We Chose USAA
USAA is a well-known financial institution specializing in providing specific services to military members and their families.
The company sometimes expands benefits out into the civilian population.
However, it’s typically focused on delivering for its core audience of military personnel.
It’s one of the top insurance companies across the board. USAA provides excellent coverage at a low price.
Pros
- Low prices
- Ease of purchase
- Excellent customer support
Cons
- Insurance isn’t available in all states
- Only services military people or family members of military personnel
- Doesn’t provide deductible gap insurance (you need to pay the deductible on the rideshare company’s policy)
Overview of Insurance
USAA rideshare insurance doesn’t apply after you’ve accepted a ride.
It covers all personal policy insurance benefits before you accept rides.
Locations Available
Available in over 40 states.
Pricing
USAA offers rideshare insurance starting at $6 per month, depending on your state’s laws.
It’s $6 everywhere except for California, where it is $3.
Claims Process
The carrier offers an easy claim process.
You can begin each claim online and call a USAA representative to assist you in almost everything related to the claim.
Discounts
Good driver, multi-car discount, and military installation garaging.
Mercury Insurance
Why We Chose Mercury Insurance
Mercury Insurance is a well-known insurance carrier that offers a wide range of auto insurance products.
It provides rideshare coverage for Uber and most other rideshare companies.
Pros
- Offered in many locations
- Low prices for rideshare drivers
- Coverage available for Lyft, Uber, and other TNC companies
Cons
- Challenging claim experience due to long wait times
- No online claims process is available
- Limited phone availability
Overview of Insurance
Mercury covers you no matter how many passengers are in your vehicle at the time of the accident.
You can get coverage for as little as $30 per month.
Contact a Mercury agent to get a free quote, choose your coverage limits, and set up your deductibles.
Locations Available
Mercury offers rideshare-friendly insurance in 50 states, except North Carolina, South Carolina, Virginia, and West Virginia.
Pricing
Mercury’s rideshare rates start at under $1 per day.
Claims Process
You need to call because the company doesn’t offer online claims for rideshare accidents.
Discounts
Offers good driver, pay-in-full discount, and E-signature discount.
Allstate
Why We Chose Allstate
Allstate is one of the best rideshare insurance companies because its policies sometimes allow you to avoid paying the deductible charged by Lyft or Uber.
You’ll enjoy this type of deductible gap coverage if you’re in an accident after turning on the rideshare app.
Pros
- Affordable coverage
- Save on expensive deductibles
- Available in almost all states, such as Arkansas, Oregon, Colorado, Idaho, and Nebraska, Minnesota, Missouri, Arizona, Georgia, Oklahoma, Nevada, and Illinois
Cons
- You can’t get rideshare insurance unless you have an existing Allstate policy.
- You can’t get rideshare insurance online.
- Coverage is only available by going through an agent.
Overview of Insurance
The deductible gap insurance for Lyft and Uber drivers remains in effect throughout each trip from start to finish.
You’ll save thousands of dollars on the Lyft or Uber deductible, which you would pay on some other insurance company plans.
Locations Available
Available in New Mexico, Texas, Michigan, Indiana, Ohio, Iowa, California, Kentucky, and Kansas.
Pricing
You need to call an Allstate agent for specific price quotes.
However, you should know that coverage starts at only $15 to $20.
Claims Process
The claim process is simple. Allstate offers an online claims process.
You can also do it on their app or over the phone with an agent.
Discounts
New car, multiple policies, student, and anti-lock discounts.
Read more about Allstate Gap Insurance
Progressive
Why We Chose Progressive
Progressive strongly encourages you to add rideshare coverage to your insurance policy.
We like their proactive approach in making sure their rideshare driver customers remain protected in the event of an Uber or Lyft accident.
The insurance carrier also covers DoorDash and Uber Eats drivers.
Pros
- Endorsements added to your policy remain active while driving for rideshare companies.
- You can get coverage as a delivery driver, too
- Available in many areas
Cons
- Must go through an agent
- More expensive than other carriers
- You need to own an existing Progressive policy
Overview of Insurance
Unlike some carriers, Progressive lets you keep endorsements on your regular personal policy active while driving for Lyft or Uber.
You can still benefit from rental car reimbursement, for instance, if you get into a rideshare accident.
Rideshare coverage includes property damage and bodily injury liability.
It covers you while waiting for rides, after accepting a trip, and while transporting your passengers.
Comprehensive and collision benefits are also included.
Locations Available
Progressive doesn’t list all the states where rideshare coverage is available.
The company asks that you contact an agent for this information.
Pricing
You need to contact an agent for more details on pricing.
Claims process
You can make claims online or by phone.
Discounts
Safe driver, student, and homeowner discounts.
State Farm
Why We Chose State Farm
State Farm offers insurance for rideshare drivers as well as a variety of food delivery apps.
You can use State Farm if you’re driving for Uber, Lyft, Postmates, Grubhub, and other transportation network companies.
Pros
- Personal policy endorsements follow your rideshare benefits
- A wide variety of food delivery and rideshare drivers can get State Farm insurance
- Simple claims process
Cons
- More expensive than other options like USAA or Mercury insurance
- Must have State Farm insurance already to get a quote for rideshare insurance
- Coverages can vary from state to state
Overview of Insurance
State Farm focuses on bridging the gap between your personal policy limits and the coverage offered by Uber or Lyft.
Depending on your state, you might still find that rental car reimbursement, roadside assistance, and medical benefits remain in place while driving for a rideshare company.
Locations Available
The company requests that you call an agent to find out in which states it offers rideshare coverage.
Pricing
You must contact an agent for specific pricing information.
Claims process
Begin a claim by calling an agent or do it online.
Discounts
Loyalty, good driver, and multiple auto discounts.
Farmers Insurance
Why We Chose Farmers Insurance
Farmers offer rideshare coverage in over 20 states.
The company also makes the claims process simple to navigate.
You don’t even need to talk to an agent when filing a claim.
Pros
- Delivery drivers can use Farmers as well
- The claims process is simple
- Pricing is competitive
Cons
- Not available in as many states as Mercury, for instance
- The website offers sparse rideshare insurance information
- You can’t purchase add-ons without the help of an agent
Overview of Insurance
Farmers works well for drivers of all the major apps, such as Lyft, Uber, DoorDash, Grubhub, and Amazon Flex.
It’s tricky to establish the types of coverage and deductibles offered by Farmers because they don’t list much information on their website.
Contact an agent for all insurance quotes and facts.
Locations Available
Available in over 20 states.
Pricing
You need to call an agent to get a quote.
Claims Process
The claims process is one of the significant benefits of using Farmers.
You can file a claim online, through the app, or by phone.
Track everything about your claim on your computer or smartphone.
Discounts
Multi-line, good driver, and student discounts.
The best way to determine how much rideshare insurance will cost in your area is to get a quote from an agent at Mercury, USAA, Progressive, State Farm, or Farmers.
If you have a different preferred insurance company, you can also call them and ask for a quote on rideshare insurance.
Remember that the price of the policy will vary from state to state.
Your driving record and any potential discounts you qualify for also dictate how much your rideshare add-on coverage will cost.
Typically, you need to contact an agent of any company from which you want a quote.
Auto insurance in general, and rideshare insurance in particular, requires a conversation as you try to understand the coverages that work best for you.
Call an agent. Ask them questions.
Don’t settle on any rideshare policy until you fully understand your coverages and when they kick in during a potential accident.
Frequently Asked Questions
Even with the breakdown we’ve provided above, it’s possible that you still have a question or two about rideshare insurance.
Don’t worry if you have questions.
Rideshare insurance isn’t the easiest topic to fully understand.
It requires a little reading and comprehension to finally see what it is and why you need it as a rideshare driver.
Does my rideshare insurance need to match my personal policy deductibles?
Generally speaking, yes. State Farm, Farmers Insurance, and Mercury will not accept claims that do not match your personal deductible for non-rideshare coverages.
You can get into a lot of trouble if you try to file a claim outside of the deductible amount with your private insurer.
Do I need rideshare insurance if I only drive for one company?
Yes. You should never drive without rideshare insurance.
Even if you only plan to use the app part-time, you should still get rideshare coverage.
All it takes is one accident to change your life forever.
Can you imagine needing to pay hundreds of thousands of dollars for the rest of your life because you didn’t take out the required rideshare insurance before working for Lyft or Uber?
Wrapping Up
Are you a rideshare driver? Rideshare insurance offers peace of mind with added coverage to protect you when your personal insurance won’t.
If you don’t have rideshare insurance in place yet, get it done immediately before turning on your driver app again.
