Rideshare insurance – All your questions answered

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When Uber sprung onto the scene in 2009, it quickly changed the way people around the world traveled to their everyday destinations. Today, it finds itself in fierce competition against growing competitors like Lyft. Even in the delivery market, Uber Eats finds itself amongst a busy marketplace crowded by other services like Postmates, DoorDash, Amazon Fresh, and Grubhub.

In addition to the promise of safe and convenient travel, ridesharing services have also created an enormous employment opportunity for drivers across the world who can make money at a whim when they meet eligibility requirements. And, with over 93 million global users each month for Uber alone, the ridesharing industry is only expected to increase, also driving the need for more and more rideshare drivers to fulfill that demand. In order to drive for a ridesharing service, however, you must have the appropriate insurance coverage.

Before you get behind the wheel, it is important to find the best rideshare coverage at the cheapest price for your state.

What is rideshare insurance?

Rideshare insurance is also known as ride-hailing insurance or, more colloquially, simply as Uber or Lyft. It is a type of insurance coverage required of all drivers to protect against damages and losses while working for a ridesharing service.

Although Uber and Lyft offer insurance for their drivers, it’s often not enough, and your personal car insurance policy usually does not cover you for business purposes. To bridge those insurance gaps, drivers can get standalone rideshare policies or coverage through an endorsement added to personal auto insurance. However, if you don’t understand the differences in these policies, you could unknowingly have coverage gaps that could increase your financial liability and leave you financially vulnerable.

If you work for a ridesharing service, you likely need rideshare insurance. While Uber, Lyft, and Didi are leading providers, many companies offer ridesharing services, as well as on-demand delivery services.

If you drive for these companies, you need rideshare insurance.

What to know about rideshare insurance periods for Uber and Lyft

There are separate parts of each ride that can be handled differently for insurance coverage:

• Phase 1: This is the period when you are waiting for a rider. There is just limited coverage with Uber and Lyft coverage, but separate rideshare insurance could help with full coverage during this period.
• Phase 2: After you accept a ride, Phase 2 covers that period when you are traveling to pick up your rider.
• Phase 3: This begins once your passenger has entered your vehicle, and the ride has officially begun.

Rideshare coverage by insurance period

Before you hit the road, it is important to ensure that you have adequate insurance coverage, no matter what phase you are in – on or off the clock.

What does rideshare insurance cover?

Rideshare insurance is a type of insurance that covers your working hours behind the wheel. Some providers like Geico offer a kind of hybrid rideshare insurance that covers you both on and off the clock.

Rideshare insurance typically includes the following types of insurance coverage:

• Collision coverage for damages to your vehicle
• Comprehensive coverage to protect from physical damages resulting from things like theft, fire, and flood
• Medical expenses coverage protects both you and any passengers
• Liability insurance covers property damage and bodily injury to other parties
• Uninsured or underinsured motorist coverage for damages from uninsured or underinsured drivers
• Legal expenses
• Towing and roadside assistance coverage
• Rental reimbursement 

There may be restrictions regarding what kinds of vehicles you can insure, such as buses, limos, and large vans. For these vehicles, you may need to purchase a separate policy.

What does Uber and Lyft insurance cover?

Uber still remains the dominant rideshare provider by 2021 market share, with Lyft close behind. Policies do not cover personal use, only your driving hours, and they often include far greater deductibles than those associated with personal car insurance policies.

Phase 1 coverage

There are limits on coverage that apply:

• $50,000 of bodily injury coverage per person
• $100,000 of bodily injury coverage per accident
• $25,000 of property damage coverage per accident

Phase 2 and 3 coverage

If there is a covered accident that occurs while you are active on the app, your policy includes $1 million worth of third-party liability coverage. There is also uninsured and underinsured motorist bodily injury coverage, but amounts vary by state.

Contingent collision and comprehensive coverage are included with Uber and Lyft insurance. Protection includes up to the vehicle’s actual value after a $2,500 deductible except for certain cars from Uber’s Vehicle Marketplace cars, which hold a $1,000 deductible instead. However, this must be accompanied by personal collision and comprehensive coverage.

“Rideshare insurance kicks in the minute the driver is on the app and available for passengers. The next level of coverage is when the driver is actually engaged, which can be en route or having a passenger in the car. If an individual is not on the app, their personal auto insurance will be primary,” says Micheal McCready, a personal injury attorney and managing partner at McCready Law, which has represented rideshare drivers in cases involving insurance coverage denial.

McCready says simply becoming a rideshare driver doesn’t transform your car into a vehicle for business use. He says, “if you want to be fully covered, you need to disclose to your personal auto insurance that you drive for a rideshare, and they must issue a separate rider or endorsement.”

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What different types of rideshare insurance are there?

You can purchase rideshare insurance in a number of ways.

Rideshare insurance

You can purchase coverage directly from your ridesharing service, but typically, this coverage fails to meet the minimum coverage recommended by experts. The biggest risk comes during Phase 1, when there are no passengers in your vehicle and you’re left at the mercy of your ridesharing service’s coverage, however limited that may be.

Endorsement

If you already have a personal auto insurance policy, you have the option of adding an endorsement to an existing policy. This is sold as an add-on that is bundled into your existing coverage.

Hybrid

Often, the best option is to simply purchase an all-inclusive policy, which is also known as a hybrid policy. This is a special kind of protection that blends both personal auto insurance with ridesharing coverage.

How much is rideshare insurance?

The cost of rideshare insurance depends on several factors. For example, Statista reports that Toyota is the most commonly used vehicle for Uber and Lyft drivers, but if you drive a new Mercedes instead, you likely will face higher rates than someone with a used Toyota. Rideshare insurance can also be purchased as a separate endorsement, but this cost would be less than the cost of a full policy.

However, when you shop for the right coverage, rideshare insurance rates typically do not cost much more than a personal auto policy.

Rideshare insurance rates by company

There are less than 20 rideshare insurance providers who currently offer rideshare coverage, but the level of coverage available can vary significantly from company to company. For example, Geico offers full coverage with a $250 deductible for just a bit more than a personal auto policy. Allstate is another company that offers rideshare insurance, offering a “Ride for Hire” endorsement in certain states. This comes at an additional fee of $20 per year when you add it to your existing policy.

These are some of the estimated average costs for additional rideshare insurance.

With all these differences, it’s important to shop around, compare policies and thoroughly read the fine print before you sign up for rideshare insurance. You will quickly find that several rate factors can significantly impact how much you pay for rideshare insurance.

Does rideshare insurance cost vary for male and female drivers?

Gender is one factor that has been proven to affect auto insurance rates. Younger males tend to drive more recklessly behind the wheel, amplifying their risk of an accident and thus facing higher rates to cover that risk.

However, some states do not allow insurance carriers to use gender when calculating insurance rates. This includes Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania.

Does rideshare insurance cost increase as age increases?

Just as gender is a factor, so is age. Your insurance rates can decrease by as much as 20% after the age of 25. However, some states are not legally permitted to consider gender when pricing auto insurance rates. California, Hawaii, and Massachusetts all ban providers from using age as a factor in price.

Does insurance cost more if you drive for Uber?

The cost of your rideshare insurance all depends on how you structure your insurance coverage. If you bundle your ridesharing coverage with your existing auto policy, it may only result in minor increases to your rate. However, if you maintain your personal auto policy and purchase a completely separate policy for rideshare coverage, you could face greater increases, because now you have to pay two separate premiums for two completely separate policies.

Which companies offer insurance for rideshare in my state?

Since auto insurance is regulated at the state level, the availability of rideshare insurance differs by state. Certain insurers may not offer this coverage in your state. For example, Allstate and USAA provide rideshare coverage in Alaska, but many other insurers don’t.

Before you select the best rideshare insurance provider for you, be sure to check state availability from the table below.

What are the best rideshare insurance companies for 2021?

There are many choices for rideshare insurance, but coverage, pricing, and availability can vary quite a bit. We look to the 2021 J.D. Power U.S. Insurance Shopping Study for each company’s customer satisfaction index rating, which gives us an accurate portrait of each company’s latest customer satisfaction rankings. We also consider ranking from another respected industry leader, AM Best, which grades companies based on their financial stability and claims processing.

Based on these factors and more, these are the best rideshare insurance companies in 2021 by state.

Best overall: Geico

Geico makes rideshare insurance easy with a hybrid policy that takes the work out of auto insurance. With just one policy, you have coverage for both personal and commercial driving so you can always be protected, no matter what. Often, there are not any mileage restrictions, and Geico’s rideshare insurance can also include coverage for food deliveries like Uber Eats, something that is not always included with the average policy.

Best for affordable rates: Allstate

Allstate offers rideshare insurance through its signature Ride for Hire program. This is a form of rideshare endorsement that is added to your existing personal car insurance policy. It includes gap coverage with a deductible of up to $2,500 while you are on your way to pick up a passenger.

Best for Uber drivers: State Farm

State Farm is one of the top two providers for best customer satisfaction, offering drivers excellent mobile resources. Its rideshare protection works as an extension to your personal auto insurance policy, using your personal coverage when you are online and without passengers. State Farm also covers Uber Eats and other similar delivery services.

Best for Lyft drivers: Progressive

Progressive is a leading provider in J.D. Power’s study, scoring well above the average insurance carrier for customer satisfaction. There are several options for rideshare insurance, far more than the average provider, with customizable coverage that best suits your needs. Progressive’s rideshare insurance also includes protection for deliveries.

Best for military members: USAA

USAA is known for insurance that exclusively covers retired or active military members and their families. It offers rideshare gap insurance that can be added to an existing USAA auto policy to help protect military members and families as they work ridesharing jobs, whether long or short-term.

How to save money on rideshare insurance

There are several ways to save on rideshare insurance, including popular car insurance discounts such as these:

• Bundle discounts: One of the easiest ways to save is to bundle different services like homeowners, renters, condo, or life insurance so you can save money by working with the same provider.
• Safe driver: Many companies reward safe driving, whether it is through safe driver, claims-free, or even a telematics-based program like Progressive’s Snapshot program. Drivers can also save after successfully completing a defensive driving course.
• Vehicle discounts: You could save money when you have a new car, passive restraints, anti-lock brakes, or anti-theft devices.

Before you purchase rideshare coverage, be sure to ask your provider what discounts may apply to your policy.

How to claim rideshare insurance after an accident

If you are in an accident, you will need to file a claim so your insurance coverage can help with the damages.

• Contact your insurance company.

Many companies offer mobile or online quotes with 24/7 hotlines to help you file a claim.

• Obtain an accident report.

Police responding to the scene can help provide a copy of the report detailing proof of your accident or loss.

• Submit the report.

Once you have a copy of the accident report, you will need to submit a copy to your insurance company for processing.

• Schedule repairs.

Your insurance company will help you make an appointment for repairs and can provide assistance regarding a rental vehicle.

• Contact your rideshare company.

After you have filed a report with your insurance company, circle back to follow up with your rideshare company to ensure no further action is needed.

Lena Borrelli

Contributing Researcher

 

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Lena Borrelli is a freelance writer from sunny Tampa Bay who has worked with such leading industry titans as Gronk Fitness, Morgan Stanley, Wells Fargo and Simon Corporation. Her work has most recently been published on sites like TIME, Microsoft News, Bankrate, Investopedia, Fiscal Tiger, The Simple Dollar, ADT and Home Advisor.