Skip to main content

How Does Rideshare Insurance Work?

A middle-age Caucasian ridesharing driver smiles at an African-American driver in the back. He has rideshare insurance.

With the rise in popularity of ridesharing apps such as Uber and Lyft over the past several years, the number of hired drivers has also been increasing. In today’s gig economy, offering ride sharing services is one of many ways to earn extra income. If you drive for Lyft or Uber, insurance has probably crossed your mind. It’s important to know your options when it comes to protecting yourself, your passengers, and your vehicle. Continue reading to learn everything you need to know about ridesharing insurance.

How Does Rideshare Insurance Work?

If you drive for Lyft or Uber, rideshare insurance is probably something you have a general understanding of but may not know exactly how it works. While we went over some aspects of rideshare insurance, including the benefits and how to get it, we’ll review some of the points on a broader scale in this article.

If you’ve reviewed the policies, you’ll see that there is auto insurance for Uber drivers and Lyft drivers. However, know that there’s a difference between coverage available from the rideshare company and coverage available from your insurance company. The period you fall under at the time of an accident will determine which coverage applies.

Generally, the periods operate as follows:

Period 0

You’re unavailable for hire and the app is off.

Period 1

The app is on and you are available for hire.

Period 2

You’ve received and accepted a ride request.

Period 3

The passenger(s) are in your vehicle and you’re driving to the destination.

This is the coverage available with Lyft and Uber:

Chart: Rideshare Insurance Policies for Uber and Lyft - Lyft and Uber Insurance Coverage

As you can see, limited coverage is provided during periods 1, 2, and 3. So, what about Period 0? When you’re not transporting a passenger, or driving to pick one up, you’re not covered under your Lyft or Uber ridesharing insurance. At that time, you’re only covered by your personal insurance. Rideshare car insurance is only active at the time you’re driving during rideshare status.

Knowing that there’s some type of coverage available, is it necessary to get optional insurance? Whether or not you need it depends on how much coverage you’d like.

Who Needs Rideshare Insurance?

If you’re a Lyft driver or Uber driver, insurance is a must. Driving for Uber or Lyft means you automatically have additional coverage on top of your personal insurance, however, it’s limited. As you can see from the table, during period 0 you’re not covered under the rideshare company’s insurance. Say you’re on your way to a major city where many workers rely heavily on rideshare apps to get home after work. If you get in an accident while you’re waiting for after-work prime time (5 PM), you’re not covered under Uber or Lyft’s insurance policies. Your coverage would be under your personal insurance policy. Again, if you suffer an injury, before or after a rideshare session, you wouldn’t be eligible for Uber or Lyft’s $50,000 liability insurance and you wouldn’t have access to the $25,000 property coverage, either.

Additionally, if your personal insurance is too limited, you’re going to have to pay the rest of the accident-related costs out-of-pocket. For many, this means getting rideshare insurance from an insurance provider to guarantee better coverage.

How to Buy Rideshare Insurance

Many car insurance companies now offer rideshare coverage. Talk to your current provider and ask about rideshare-specific options that will cover you and your car in the event of an accident. Remember, your personal car insurance will provide limited coverage regardless of the rideshare period you fall under, but for additional coverage that may include things like liability to others, damage to your car, medical coverage, and uninsured/underinsured motorist coverage, you’ll want to add a rideshare endorsement to your current policy. Options and prices vary depending on which state you live in and which provider you use.

When you’re earning money with Lyft or Uber, car insurance may be the last thing you want to think about, however, it is essential to protecting you as a driver. Fortunately, rideshare insurance is fairly affordable and easy to get.

To learn more about rideshare insurance, give Freeway Insurance a call at (800) 777-5620. We’ll answer your questions about ridehsaring insurance and let you know if we offer cheap rideshare insurance bundles in your state.

Ready to Get a Quick Quote?