A popular new way to make extra money, or even a full-time income, is offering your time and vehicle for rideshare services such as Uber and Lyft. However, suppose you choose to work for Uber or Lyft. In that case, you should know that these companies only provide limited liability insurance for your vehicle, with full coverage only applying once you turn on the app. Adding rideshare insurance to your auto policy adds extra protection to make sure you are adequately protected with no gaps in coverage.
How rideshare insurance works
Rideshare companies like Uber and Lyft may provide some coverage for their drivers while using their personal vehicles. Still, that coverage may not be enough to adequately protect you if your care is involved in an accident. Adding additional rideshare insurance to your personal car insurance policy is a way to fill the coverage gap.
According to the National Association of Insurance Commissioners (NAIC), there are three periods in the ride-sharing operation.
- Period 1: This is the beginning of the process while you have your app on and are waiting for a ride request.
- Period 2: Period 2 starts when you get a ride request, but no passengers are yet in your vehicle.
- Period 3: This is the last phase of the rideshare transaction when passengers enter your vehicle.
Rideshare companies mandate their drivers to have a personal auto insurance policy meeting their state’s minimum liability insurance requirements. Uber and Lyft do not protect you with insurance coverage while your app is off.
When your rideshare app is off and you are awaiting a ride request, the company provides third-party liability coverage for covered accidents according to preset limits. However, if your app is off and you are using your vehicle for personal use, your personal auto insurance coverage applies.
The third-party liability limits Uber and Lyft provide are:
- $50,000/person for bodily injury
- $100,000/accident for bodily injury
- $25,000/accident for property damage
Remember, Uber and Lyft’s coverage only steps in after your personal insurance policy has paid its part of the claim. The rideshare company’s coverage pays an excess in a third-party liability insurance claim that your car insurance doesn’t pay.
Different types of rideshare insurance
Rideshare insurance can offer added protection if you’ve taken on a rideshare job for extra income. There are different types of rideshare insurance. It is important to understand the different types of policy and decide on the one that will best fit your unique situation.
A few auto insurance companies offer a “hybrid” policy which combines a personal auto insurance policy with rideshare coverage. It is a policy covering drivers for both business and pleasure operation of their vehicles.
Rideshare insurance endorsement
Many car insurance providers will allow you to add rideshare coverage to your personal auto policy through an endorsement. Rideshare insurance endorsements are not offered by all insurance carriers and not in every state.
Commercial auto insurance policy
Since rideshare insurance is not available in every state, you may have to purchase a commercial insurance policy to cover you while you are offering rideshare services.
You can expect to pay more for a commercial auto insurance policy than you would for a rideshare insurance endorsement. However, it may be your only option if rideshare insurance is not sold in your location.
Decide what type of coverage you need
There are a few different types of rideshare insurance you can buy. You can narrow it down by deciding on a few key factors before you shop, such as the deductible you want, what limits of coverage you need, and extra options you may want, such as rental or towing reimbursement.
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