What is Rideshare Auto Insurance?
Simply put, a rideshare is refers to anyone who is paid to give rides in their personal vehicle. Most rideshare companies have mobile apps from which customers reserve and pay for rides from point A to point B, and you either accept or decline to drive the customer to that location. Working as a rideshare driver has become a well-known method for making money, whether you choose to drive full-time or part-time.
While many drivers transport people, there are others who choose to accept assignments for picking up and delivering products/food/etc. in their personal vehicle. If you currently work as a rideshare driver or are considering doing so, it is imperative that you understand the importance of rideshare auto insurance when it comes to holding one of these ridesharing or delivery service jobs.
The list below provides examples of a few well-known rideshare or delivery companies in the US. If you drive for one of these or other similar companies, you need to know about rideshare insurance.
- Uber
- Lyft
- GrubHub
- DoorDash
- Phoodiis Delivery
- Uber Eats
- Postmates
- Instacart
- Shipt
- Amazon Flex
What is Liability?
The term liability means a responsibility for something. In most cases it means legal responsibility. When it comes to car insurance, it mostly refers to legal responsibility for damage to people or property during a collision. Working as a rideshare or delivery driver, using your personal vehicle, can create quite the liability for you if you are not properly insured.
Using your personal vehicle for business typically requires specialty insurance as part of your coverage. Without this to cover you while you work with a rideshare company, getting into a collision and being found at fault might leave you personally responsible for paying the damages.
Examples of damage you could be responsible for include:
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Body Injuries:
If you are at fault in a collision, you can be held responsible for any injuries incurred by passengers in your vehicle – including customers of your rideshare business, as well as occupants of the other vehicle. -
Death:
It's hard to consider causing an auto collision in which someone dies, but if it happens and you are at fault, it can be very costly. Families of wrongfully killed loved ones often sue the responsible driver for lost wages, loss of affection, and other issues that the death may have caused for the family. -
Damaged Property:
Whether you damage other vehicles, a fence, a telephone pole, a building, or something else, you can be liable for repairs to that property. Property damage coverage pays for damages caused by your vehicle to someone else's property. It also provides you with a legal defense if another party files a lawsuit against you.
With appropriate coverage, your policy will also cover the cost of legal defense, should you be sued for property damage, bodily injury, or a death.
NOTE:
The vast majority of insurance companies will not cover any liability that happens while you are conducting a business with your personal vehicle, such as transporting passengers who pay for the service or delivering food or other goods. This is why it is important for you to secure a rideshare insurance endorsement on your personal coverage policy.Do Rideshare Companies Offer Insurance?
Most of the large companies do provide insurance for their drivers but there are restrictions on its coverage and use. The coverage is limited to the time frame from when you accept a rideshare request to when you complete the rideshare.
From the time you sign onto the app and accept a rideshare assignment, you are not necessarily covered. In addition, because you have signed into the app, your personal coverage company suspends your coverage until you sign out of the app. This leaves a vital coverage gap during which you could get into an accident or deal with something else that may affect your vehicle or person.
When it comes to the coverage provided by the company, the deductibles are typically more expensive than a personal policy, and you are expected to pay the deductible in the event of an at-fault event. Such deductibles are often $1,500 to $2,500. A rideshare endorsement or policy would help defray that cost.
What is Rideshare Insurance?
Rideshare insurance provides coverage during the window of time between your personal policy being active and the rideshare company's policy kicking in. Your personal policy covers you until you sign into the app. At that point, it suspends coverage. The rideshare coverage begins the moment you accept a rideshare assignment through the app. In between those two events, your rideshare insurance is in force.
Due to the nature of working as a rideshare driver, you have several instances per shift when you are in that gap time frame. Each time you drop off a fare and sign back on, ready to accept the next one, you are without coverage, unless you have a rideshare policy or endorsement.
Why is Rideshare Insurance Important?
Many of the larger transportation companies do provide limited coverage when you are on your way to pick up a customer or have a customer in your vehicle. Your personal policy covers you when you are not working.
However, there’s still the gap. When you make yourself available for hire – by signing into the rideshare app - but have not yet been hired to provide services, your personal policy is suspended, but the rideshare company insurance provides very minimal coverage. (Typically, your state liability only.) NOTE - Uber and Lyft provide coverage for double the state-mandated minimum.
In other words, you are without any coverage for your injuries and damage to your vehicle during this time.
If you purchase a ridesharing endorsement to attach to your personal policy, you will be covered during the gap when you have signed into the app but are waiting for your next rideshare match.
Most companies, including Uber and Lyft, require you to drive a newer model vehicle, which means you probably have payments and car repairs can be expensive. Having your car damaged during the gap period, in an at-fault wreck, leaves you without damage repair, but you have to pay the car off anyway. And if the car is not totaled, it will probably no longer meet the company's visual standards, therefore, you will be unable to continue working.
How Much Does It Provide and What Does it Cost?
Rideshare coverage prices vary; therefore, it’s important to shop around for the best value for your dollar. Most companies add $15-$20 per month to your personal policy to cover you during the ride share gap time frames. In addition to providing collision and comprehensive insurance during this time, it will also pay any difference between a deductible on your personal policy and the deductible on the rideshare company's policy, which are usually much higher.
Coverage Types
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Collision Coverage :
This coverage pays to repair your vehicle after you are in a collision. This can be a collision with another vehicle, or a fence, wall, house, or other objects. If you are making payments on your vehicle, the lender requires you to carry collision insurance. -
Comprehensive Physical Damage :
If your vehicle is destroyed by something other than a collision or if it is stolen, your comprehensive physical damage coverage pays for it. This can be when a tree falls on it in a wind storm, a falling rock hits it, a deer gets in the way of the car, or other damaging events. -
Medical Payments :
While liability coverage pays for injuries to occupants of the other vehicle, your own injuries are not covered. Medical payments coverage will pay for your injuries and treatments resulting from a collision. -
Uninsured Motorist :
When you are in a collision with an uninsured motorist, this coverage steps in and pays for damages, medical bills, and other expenses incurred. Your insurance company will then seek repayment from the uninsured motorist. -
Gap Coverage :
When your vehicle is a total loss, your insurance company will write you a check for the fair market value of the vehicle. Sometimes, the car loan exceeds the fair market value and you are left paying the difference to your lender. Gap coverage steps in and makes up that difference for you. -
Extended Coverage :
When you have extended coverage, your vehicle is covered during unforeseeable acts that cause damage. Examples include riots, fires, hail storms, and civil disturbances.
Where is it Available?
Currently, rideshare coverage is available in almost every state. However, not every company offers coverage in every state. Your personal policy carrier can tell you if it offers ridesharing endorsements or addons in your state. For states that do not allow ridesharing coverage, you can purchase commercial driving insurance. However, the premiums for commercial coverage are significantly more expensive than ridesharing insurance premiums. In 2019 coverage examples for rideshare coverage ranged from $6 a month to $150 a month. Commercial coverage was $5,000 - $8,000 per year.
What Are My Options if Rideshare Insurance Isn’t Available?
What you can do if ridesharing insurance is not available largely depends on the reason it’s not available.
Company specific :
If it’s because your company doesn’t offer this type of insurance in your current state, you can always switch your personal policy to a company currently offering ridesharing coverage.
State specific :
If your state does not allow ridesharing policies, you can buy a commercial policy. (NOTE: They are much more expensive than rideshare coverage.)
What Steps Should You Take if You Get in an Accident While on a Rideshare?
If you are in an accident while transporting a rideshare match, follow these suggestions:
- Call local law enforcement
- Do not admit fault or discuss the accident with anyone on the scene, except law enforcement
- Exchange insurance information with the driver of the other vehicle(s)
- Call your rideshare company and report the accident
- Notify your insurance carrier
- If you can do so safely, take photos of damage, road conditions, and lighting at the place of the accident