Rideshare Insurance – do you need it? The short answer is, you sure do! You absolutely do. Ridester’s advice is Do Not Drive Without It!
How Rideshare Insurance Works
If you’re an Uber or Lyft driver, you know that both companies require you to have your own personal insurance on your car before they’ll allow you to drive for them. You also know they have their own insurance that covers you during certain periods when you’re working. So, you may be wondering, ‘what is this rideshare insurance and why should I have it?’
That’s a good question actually. And to answer it, let’s break down the different types of insurance and take a closer look at each one.
Your own personal insurance basically covers you when you’re driving your car for personal reasons. It does not cover you at all if you’re driving for Uber and Lyft. And that means, anytime you’re driving your car and you have one or both of the apps open and you’re logged in and able to receive pings, your personal insurance is not covering you. Should you get into an accident during this time, you would have no insurance coverage at all. Your personal insurance company would deny any and all claims you might make during this period.
Your personal insurance company will deny all claims you make anytime you have either app turned on. And not only will they deny any claims you might make, they will also cancel your coverage as of the moment you inform them you were doing rideshare driving! So, you definitely don’t want that to happen. If you don’t have active, valid insurance on your car, you’re not allowed to drive it at all and if you get caught driving after your insurance has been cancelled, the consequences can be very serious.
The Three Insurance “Periods” for Rideshare
Fortunately today, many personal auto insurance carriers have added an option for rideshare drivers, called a “rideshare endorsement”. This endorsement can be added to your regular insurance policy and they’re not really that expensive. They may cost you somewhere between $15-$25 extra per month. But considering you’re earning money with your car, you should easily be able to cover that expense. In the end though, whether it’s easy or not, it is a necessity.
Not all insurance companies offer a rideshare endorsement and they don’t offer it in all states. But check Ridester’s 2018 article on this subject for a list of companies that offer the coverage and the states they offer it in – as of the time the article was written.
Rideshare Insurance Period 1: This period is when you’re signed in and online with either the Uber or Lyft apps and waiting for a ping. This period covers the time before you get a ping. You’re online with the rideshare services, available to receive calls, but you haven’t gotten a call yet. You’re probably driving around trying to position yourself in the best area to get a call. Or, you may be parked on the side of the road or in a parking lot – just waiting for a call.
Your personal insurance will not cover you during this time and if you have an accident or any kind of incident where you need to submit a claim to them – if they find out you’re a rideshare driver, they’ll check to find out if you were online during when the incident occurred. If you were, not only will they deny your claim they will also cancel your coverage! And you do not want that to happen. The only way to avoid this situation is to have proper rideshare insurance coverage.
Rideshare Insurance Period 2: So, in Period 1, you were sitting around waiting for a ping. Period 2 kicks in the moment you receive and accept a ping. The moment you click Accept – you are now in Period 2. This period is the time in between the moment you accept the ping and the moment the passenger gets in the car and you tap “Start Trip”.
If you are involved in any kind of traffic accident or incident while you’re on your way to pick up your passenger, Rideshare Insurance would pay the claim. Your personal insurance definitely would not pay the claim during this period. And just like in Period 1 – they would cancel your coverage putting you in quite a bind.
Rideshare Insurance Period 3: From the moment you tap “Start Trip” on your app, right after the passenger gets in your car, you are covered under Period 3 rideshare insurance.
During this period the amount of coverage you have actually goes up quite a bit. That’s because they provide additional coverage to protect your passengers. When you have a passenger in the car that is an additional liability in the event anything were to happen that might injure them. So, they increase the coverage during these times and that’s what makes Rideshare insurance unique and different from your regular personal insurance.
Why Can’t I Just Use Uber & Lyft’s Insurance
The real purpose of Uber and Lyft’s insurance is to provide additional liability coverage to passengers who may be injured in your car and to people who you might hit and injure on the way to pick up a passenger. For this reason, their insurance does not cover you while you’re in Period 1 – or when you’re waiting for a ping.
The Tricky Thing: The tricky thing about all this is that if you are involved in an accident or some type of serious incident, you’ll report it to Uber or Lyft. And if the event occurred during Periods 2 or 3 – the two periods they do cover – they will force you to first report it to your own personal insurance company! Their insurance will not kick in until they get an official denial from your insurance company. In other words, their insurance is considered secondary insurance and your personal policy is considered the primary policy. Before a secondary policy can kick in the primary policy must first deny a claim.
So Uber and Lyft’s insurance can’t kick in and pay a claim until your personal insurance carrier denies that claim! Crazy, right? Yes, it is crazy – especially considering that Uber and Lyft have always known that personal insurance won’t cover these things. And up until very recently, they also knew that if you report an incident like this to your insurance carrier – that they’ll cancel your insurance!
Uber and Lyft have always put drivers at some serious risk of losing their insurance by making their insurance secondary. They made it secondary because it’s so much cheaper for them that way. If theirs was primary it would be much more expensive for them. So, once again, they put a lot of risk onto the backs of drivers.
That’s why it’s so important for you to have rideshare coverage. If you have rideshare coverage, then you never need to worry about your insurance company cancelling your policy because they find out you were doing rideshare.
Couldn’t I Get Away Without Having Rideshare Insurance?
No! Please, never think you can get away without it. You might think if you’re involved in an accident, that your insurance company will never find out you were rideshare. Especially, if you were in Period 1 where you didn’t have a passenger in your car. Or, if you were in Period 2 when you were on your way to pick up a passenger.
You may imagine that if you’re on your way to pick up a passenger and you’re involved in an accident, that you can just cancel the trip and not follow through on picking them up. How would your insurance company ever know you were doing rideshare, if you didn’t have a passenger in your car? Well… they have their ways! Believe me!
In a lot of cities now, Uber and Lyft drivers have to display trade dress, or a decal or sticker in their windows to indicate they’re rideshare drivers. If you live in one of those cities, the police officer who shows up at the scene of your accident will surely make note of it. He may even ask you about it. He may ask you if you were logged into one of the apps? Maybe you’re shaken up so you accidentally tell the truth! Well, the insurance company will find out that way.
Or, maybe you’re in complete command of the situation and you decide to lie and you tell him no, you weren’t signed in. That’s not going to help you either. Because the insurance company, once they’re notified by the police report that you had the rideshare decals in your window – believe me they will check up to see if you were logged into an app. They have their ways.
So, you definitely do not want to risk getting into this kind of trouble. You should also know the auto insurance companies have something like a credit bureau where they all report to a central system any negative information they find about a driver. So, if they catch you doing rideshare that you didn’t report to them – they’ll put that information in your permanent record that the other insurance companies will be able to see. And this might make it very difficult for you to get insurance even from another company. And if you can get it, it will no doubt be far more expensive than it was before.
You’re not going to save anything by trying to save a few bucks on this. It’s best to just do the right thing and get the rideshare insurance if it’s available in your area.
If you have the rideshare endorsement and have to report an accident to your insurance company, they will not penalize you in any way when they “find out” you were doing rideshare. Because you would have already told them that and you would have already been paying for the additional coverage.
Okay. One of the most common questions people ask is, “Do I need insurance?” The answer is no. Should I have insurance? The answer is yes.
Now, what do I mean by that? Obviously, you need insurance to drive. You cannot be accepted with Uber or Lyft if you do not have insurance. But the question is, do I need something specific called Rideshare Insurance or an endorsement?
Let me break it down. Are you covered with Uber and Lyft with their insurance policies? Yes, you are, but only at certain periods. So let’s break it down.
Let’s take it from the beginning. Offline. Offline is you’re just driving around with the family and friends, you’re on your basic State Farm or whatever insurance, Allstate insurance.
That is whatever. Okay. That says if you don’t even exist as a driver. Now, Period One is where it’s tricky. Period One is when you are waiting around in a parking lot or driving around and you do not have a passenger and your apps are on and you are looking for a passenger.
This is where you will not be covered by most insurance companies and Uber and Lyft will not cover for you, okay, for the most part.
Now, where they do cover, is en route, so you get pinged and you’re picking up this X person and whoever at one location. While you’re en route, you’re now covered by Uber and Lyft, insurance immediately kicks in.
And when you get the person in the car and they’re in your car, this is called Period Three. Now, you’re covered by their insurance, and the insurances change depending on the Period Two or Three, there’s more coverage.
Okay, and you can look at the different details on that. I’ll give you guys a link for that. Now, the tricky thing is, should you drive around in Period One or sit around without that rideshare endorsement.
So, rideshare endorsements are insurance companies that are already covering you regularly, and they’re saying, “Hey, we know you’re doing rideshare, we will cover you for that available Period One.”
Now, the tricky thing is a lot of insurance companies are not open to it yet. Some are and more are jumping on. They’re just unfamiliar. This is a new territory for them.
Again, this is a new industry and they’re not sure. And so some insurance companies, if they know that you’re doing rideshare, they will drop you. So you need to look into that, do some research.
Will your insurance company drop you? The other thing you have to factor in is, what is your risk-reward tolerance? If you’re driving only a few hours a week, is this period one worth getting an additional $15, $10, $7 to $20 a month extra on your insurance so that you can be covered with this?
That’s up to you. I’m doing it, but maybe you don’t need to, maybe you’re a type of person that you only wait in parking lots.
Now, many of us dangerously are driving around during Period One waiting for a hail. So, you’re looking at your phone constantly, which is dangerous and you may need to stop.
And so if you’re that person, you definitely need that insurance on Period One. Now, so this is a tricky thing and it really comes down to risk tolerance and what you are willing to live with. But the thing is it’s always changing because this industry is growing and it’s new.
Instead of being super dated by this video the moment I publish it, I want to show you guys this one web page. So right here, guys. You guys know I really appreciate Harry. I’ve really learned a lot from him, you will learn a lot from him. I used to go to his website all the time, bookmark it, go to it often.
This is the most helpful resource I can point you to. Rideshare insurance actually is for Uber and Lyft because they’re constantly updating. He has his own tab and there’s an Uber accident lawyer that he will recommend.
So if you read through this, it’ll break down the different…these are different other articles, why do I need it and so forth. And it’ll also break down different states and their specific laws.
Now, this is a little dated, it won’t show all the different insurance providers, like Geico or whoever but it’s a really good start to go. So to sum up, you don’t need it, but you probably should use it.
If you’re super careful and you don’t drive a lot…again, the more you drive, the more opportunity you have to make a mistake or get hit. And again, you may say, “This is why I’m a really careful driver.”
But other people aren’t. And so maybe they hit you and you couldn’t do anything about it. So you have to weigh that out. And you also need to look in and do some research.
Will your insurance company will drop you or not? So for me, the extra $10 bucks I’m spending a month is worth not worrying about that. All right, so that’s insurance in a nutshell.
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