Rideshare services such as Uber and Lyft represent a fairly new alternative to taxi and limo services. The fact that these services are new means that there’s a lot of confusion regarding various aspects of the service, and that includes rideshare insurance concerns.
What kinds of insurance options are available to rideshare drivers? Do they even need insurance to begin with?
The short answer to whether rideshare drivers need insurance is yes, they do. However, further clarification regarding insurance options for rideshare drivers may be required. Rules and available options are different for different states. Here are some facts that can help you understand your insurance situation if you plan to be a ride share driver:
There are different periods and times that may require special coverage when you become a rideshare driver. Here’s an overview of these periods:
- Period 0. The app is off and you’re not waiting for a fare.
- Period 1. You’re online, and you’re waiting for a fare.
- Period 2. You’re online, and now you’re on your way to fetch your ride request.
- Period 3. The customer is in your vehicle and you’re transporting them to their destination.
State and Rideshare Services Insurance Requirements
States have different requirements regarding rideshare insurance, so you better do your own research on why kind of insurance you need as a rideshare driver in your state. For Period 0, in general this is met by a personal auto insurance policy that meets the state minimum requirements. But the state may also have higher requirements for periods 1-3. In fact, it’s possible that a state may require you to get a commercial driver’s license (and commercial insurance) if you become a rideshare driver.
The rideshare service you’re planning to join may also have their own requirements regarding the personal car insurance you need to obtain. Uber and Lyft, for example requires that as a rideshare drive your personal car insurance must at least meet or even exceed the state minimum requirements.
Do You Need Additional Insurance?
What you need to remember is that many personal car insurance policies specifically state that they won’t provide benefits for any accidents when you’re driving for pay.
However, the more prominent rideshare services such as Uber and Lyft offer insurance protection to cover these personal policy gaps. In the event that the rideshare driver is at fault, the liability coverage will apply to the customers, other passengers and drivers in other cars involved in the accident, and pedestrians who are hit by the rideshare driver.
You may have noticed that these rules on coverage don’t say anything about your own injuries as the rideshare driver, nor do they offer coverage for the damages to your own vehicle. That’s because your own injuries and the damage to your vehicle are your responsibilities. You have to arrange for coverage for them yourself.
What you need, therefore, is a “rideshare-friendly” personal auto insurance that provides coverage for your own injuries and for any damage to your vehicle when you’re a rideshare driver. You will have to hunt for these policies yourself. In some states, you may find them easily.
But in other states these rideshare-friendly policies may not yet exist, which may then mean that your only alternative is to get a commercial auto insurance policy. These policies can be expensive, as they may require up to $500 a month.
If you’re planning to be a rideshare driver, you need to study the rideshare service requirements and provided coverage, and then provide coverage for your own needs. You also have to comply with state requirements regarding rideshare driver insurance. These may require a bit of time and effort, but taking the time is better than becoming a rideshare driver without insurance.