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Rideshare Insurance

Hispanic driver on a rideshare app. Handsome man driving a young woman passenger to her destination

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When you drive for a living, it’s important to protect your workspace and those who utilize it. Although the cabin of a vehicle isn’t the traditional workspace, it’s become an office for those who provide rideshare services through various companies across the nation. Understanding the importance of rideshare insurance, including what the company you drive for offers and what you need to secure for yourself, can help you and your passengers remain protected.

Importance of Rideshare Insurance

“Rideshare” is a term that refers to a form of on-demand transportation service. Lyft and Uber are two of the most common ridesharing companies currently in use. Although the concept of ridesharing stemmed from taxi service, one of the main differences is that a rideshare driver uses their own personal vehicle to transport passengers instead of a dedicated transportation vehicle, like a taxicab. Maintaining proper insurance coverage on a personal vehicle is always important, but when you spend hours every day behind the wheel and transport other people, it’s especially crucial to have enough coverage.

If you’re working for the rideshare company and get involved in an accident, you could be determined to be at fault, which means the responsibility for any damages and injuries would fall on you. Without sufficient coverage, you could end up paying out of your own pocket for expensive medical bills and car repair costs. Insurance companies offer different types of coverage, so having the right type(s) in place is also an important consideration.

Rideshare Insurance Offering

Although rideshare companies often provide some coverage for drivers, it’s typically not enough to cover the costs associated with a major accident. These companies typically provide the state-mandated minimum coverage amounts to drivers, which may not include certain options like underinsured/uninsured motorist coverage. Additionally, that coverage may only apply when you pick up a driver, not when you’re waiting for someone to request a ride. If you’re driving around while you wait for a request and get in an accident, you could be responsible for the full bill.

Some drivers wonder whether their personal insurance policies would cover damage incurred in the aforementioned situation. However, most policies specifically exclude coverage for ridesharing, unless the driver selects a policy that’s designed for this purpose.

Stages for Rideshare Drivers

When you open your ridesharing app to start a driving shift, the three stages that can apply include:

  • Available: This stage refers to your availability as a driver to pick up a passenger.
  • On the trip: This stage begins when you pick up your passenger and are on the way to their destination.
  • Enroute: When you accept a passenger’s request for a ride and are headed to pick them up, you’re in the enroute stage.

If the app isn’t open in your vehicle, any insurance coverage you have secured on your vehicle would apply. But when you turn the app on, the company you drive for provides some coverage.

The phase you’re in determines what level of coverage applies. For example, Uber’s coverage offers bodily injury and property damage coverage during the available stage, but increases the coverage to include $1 million in third-party liability coverage, underinsured/uninsured motorist coverage, and contingent collision and comprehensive coverage up to the vehicle’s value when you move into the enroute or on the trip phase. Lyft offers similar coverage options to drivers, although the current deductible on the comprehensive and collision coverage is slightly higher than Uber’s.

Auto Insurance Coverage Options

Auto insurance companies offer different coverage options under their policies. These may include:

  • Collision: Collision coverage applies if a collision occurs between your vehicle and other vehicle. This type of coverage doesn’t have a limit in place and may apply regardless of which driver is at fault.
  • Comprehensive: Comprehensive coverage applies to the cost of damages incurred in an accident that isn’t a collision with another vehicle. Examples of applicable situations include hitting an animal, vandalism, or weather conditions. If someone steals your car, your comprehensive coverage could pay you its estimated value so you can get another car.
  • Third-party liability: Third-party liability coverage pays for damages caused by a third party, which is someone or something other than the driver. This type of coverage may apply if you hit another car from the rear while driving for a rideshare company to cover the damage caused to their vehicle.
  • Uninsured/underinsured motorist bodily injury: Many states require drivers to have uninsured/underinsured motorist bodily injury coverage to protect themselves from those who don’t have sufficient insurance. If you get in an accident with someone whose insurance policy won’t cover the damages, this portion of your coverage may apply. The amount provided by rideshare varies by state.
  • Personal injury protection (PIP): A few states require drivers to have personal injury protection (PIP) coverage, which is also known as “no-fault” coverage. It covers the costs incurred if someone gets injured in a collision, including medical bills, lost household services, and/or lost wages.

Closing the Rideshare Insurance Gap

You might be happy with the insurance coverage provided by the rideshare company, especially if you have an insurance policy that meets the minimum requirements set forth by your state. But if you want additional coverage or you’re concerned about protecting yourself and your vehicle when you’re waiting for a ride request, some auto insurance companies offer options to close the gap. This type of policy, often referred to as a ride-share add-on or endorsement, fills in the gap in coverage between what the rideshare company offers and your personal auto insurance policy.

Some of these policies also include cash to help cover part or all of the deductible, or the amount you have to pay before the coverage begins. For example, if Uber’s policy had a $1,000 deductible on its collision coverage, you’d be responsible for paying that much out of pocket in the event of a collision. If you have rideshare add-on coverage, the policy might pay for half the deductible amount, leaving you responsible for $500 instead.

Before you get behind the wheel and turn on a rideshare app, make sure you understand what insurance coverage is available to you and whether you need to secure a gap policy. It’s not worth it to take a risk, especially if that risk ends up costing you a lot in the form of automotive damage or medical bills due to an injury.

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.


About the Author

FIXD Research Team

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

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