Over the last few years, ridesharing has graduated from “fad” to “established part of our culture.” Drivers can earn good money operating their own vehicles, determining their own work schedules, and passengers can summon a ride to and from anywhere with the mere press of a button on their smartphones. The convenience for both drivers and riders alike is obvious and here to stay.
However, drivers for companies like Uber and Lyft do accept some inherent risks when they log in to begin a shift behind the wheel. Even though they’re driving their own cars, they’re still transporting total strangers who trust their drivers with their wellbeing.
While Uber and Lyft do provide their drivers with some insurance coverage during their fares, many drivers don’t realize that they still face risks even when they’re on the clock. As a result, it’s vital that drivers maintain a rideshare insurance policy that protects them during every part of the trip…before, during and after, to supplement their personal auto policy as well as the coverage provided by their rideshare company.
What does the rideshare company provide and what insurance does a driver need to carry?
- If your insurance provider discovers you’re a driver relying solely on your personal auto policy to supplement the rideshare company’s coverage, there’s a good chance the driver’s provider will cancel their policy altogether. To drive for a rideshare company, you need to carry “business use” insurance. Business use traditionally covered people who used their personal cars to deliver pizza or flowers, it excluded people using their personal vehicles as taxis. Some insurance carriers are removing those exclusions and/or developing new policy products to address ride sharing exposures. Talk with your insurance professional to make sure you have a proper policy.
- A rideshare insurance policy covers a driver if the costs associated with an accident that occurs while they’re on the clock exceed the limits of the rideshare company’s coverage. To give you an idea of what coverage Uber and Lyft provide their drivers, take a look at these coverage limits, courtesy of NerdWallet:
- Limits with passengers in the car or after accepting a fare: $1 million liability per incident, $1 million uninsured/underinsured motorist per incident
- Liability limits without passengers and before accepting a fare: $50,000 per person, $100,000 per incident, $25,000 property damage.
- Comprehensive/collision: $1,000 (Uber); $2,500 (Lyft).
If this rideshare coverage falls short of protecting a driver following an accident on his or her shift, it could cost that driver thousands or even tens of thousands of dollars out of pocket.
- A rideshare policy will also provide coverage where Uber and Lyft do not — namely when an accident occurs when a driver is on the clock but is not in the middle of, or headed to, a fare. The fact that these policies go beyond what rideshare companies will cover reinforces their importance.
- It’s not uncommon for a driver’s rideshare policy to have a lower deductible than Uber or Lyft’s coverage, meaning it can sometimes be more effective to report an accident to your own insurance provider than to the rideshare company. To clarify: You still have to alert your rideshare company of an accident if one occurs while you’re on the app, and you’re entitled to their coverage in these instances, but you are not mandated to use it if you have more affordable coverage elsewhere.
Contact Foundation Insurance Group
Ultimately, adding a rideshare insurance policy that covers business use, to supplement your personal auto policy, is now mandated by most insurance providers, and the benefits are obvious. With this in mind, be sure to talk to your Foundation Insurance Group agent to discuss what options are available to you as a rideshare driver. They will be able to look at the rideshare insurance and your current auto policy and make recommendations so that you’re protected whenever you’re on the app.