In this article we will explore supplemental insurance alternatives available for Lyft, Uber, Sidecar, and Carma.

Driving for rideshare companies is a great way to earn extra cash as a part-time job and, for many people, it makes sense as a full-time career.

Realize, however, that more time on the road means increased risk of accidents.

Also, keep in mind that being a rideshare driver puts you in a special category where your existing auto insurance may not provide adequate coverage or any coverage at all.

A rideshare insurance policy will save you a lot of grief in case you have trouble on the road. It also gives you the peace of mind knowing that your financial life is not at risk in case of accidents.

Do you need insurance as a rideshare driver?

Absolutely!

Unfortunately, your existing auto insurance may not be rideshare-friendly.

The good news is that more and more insurance companies have supplemental insurance alternatives available for Lyft, Uber, Sidecar, and Carma.

This guide will help you explore the choices.

What is Rideshare Insurance?

As the name implies, rideshare insurance is an insurance policy designed specifically for people who require coverage while they are operating as a rideshare driver.

Two of the biggest ridesharing companies in the business, Uber and Lyft, provide drivers with automatic coverage while they are driving for the company.

Without a doubt, the insurance policy that these ridesharing companies offer is generous. But the question is, is the coverage enough?

Unfortunately, there are two big areas where these automatic policies are lacking.

First, the deductible level may be as high as $2500. That means you may have to pay up to $2500 to repair your vehicle if you are the at-fault driver.

Second, the policies do not cover the entire rideshare trip. They only cover drivers who are on their way to a pickup point or drivers with passengers in the vehicle.

To illustrate the coverage of the typical rideshare insurance offered by Lyft or Uber; let’s break a trip down into three periods:

Period 1: Driver utilizes the ridesharing app while waiting for a ride request
Period 2: Driver receives a ride request and drives to the pickup point
Period 3: Driver arrives at the pickup point and drives passengers to their destination

Typical rideshare insurance will only cover periods 2 and 3, period 1 isn’t covered.

This USAA Ridesharing Insurance infographic may make it clear. From the time you accept a ride request, to the time you deliver your passenger to their destination, you are covered by the TNC’s (Uber, Lyft, etc.) insurance. When you are waiting for a ride request and have the TNC’s app turned on, you are in a grey area where neither your personal insurance nor the TNC’s insurance may provide coverage for an accident.

If you are driving around waiting for a ride request and you are in an accident, the automatic coverage offered by Uber and Lyft won’t apply. You will need insurance coverage through your existing policy or through one of the supplemental insurance alternatives available for Lyft, Uber, Sidecar, and Carma.

The Risk of a Non-Ridesharing Insurance Policy

If you think you can depend on your personal insurance during these situations, think again. Most personal insurance policies do not provide coverage for commercial driving.

Worse, driving as a rideshare driver may affect your existing policy.

If your policy is not rideshare-friendly, your insurance company could drop you once they discover that you are using your personal car for commercial purposes.

And if your existing insurance company drops you, you’ll be perceived as a high risk by your next insurer. That means you will pay more for a new insurance policy.

Some rideshare drivers try to hide the fact that they are driving for Lyft, Uber, Sidecar, and Carma and assume that they will be OK if an accident happens.

This is a bad idea!

If an accident occurs, these drivers may find that their insurance company chooses not to cover the accident AND chooses to drop their policy. Talk about a double-whammy!

It is far better to explore the supplemental insurance alternatives available for Lyft, Uber, Sidecar, and Carma up front and make sure you have adequate insurance before you pick up your first rideshare passenger.

Types of Ridesharing-Friendly Insurance Policies to Choose From

Commercial and Commercial-Like Insurance Coverage

A standard commercial policy works best if you’re planning to use your vehicle for commercial purposes.

These commercial plans, however, may be pricey. They are really intended for limo and taxi drivers, not rideshare drivers.

The good news is that there are insurance policies created specifically for rideshare drivers that provide commercial-like coverage.

Check with different insurance companies and look for coverage designed for rideshare drivers in particular.

Shop around and look for the best deal because several of the most popular insurance companies do offer coverage for all three of the rideshare periods.

Period 1 Coverage

Some of the supplemental insurance alternatives available for Lyft, Uber, Sidecar, and Carma offer collision coverage for period 1 only.

These policies are meant to complement the standard rideshare insurance that Lyft and Uber provide to their partners.

Again, hunt down the best deal before choosing a policy.

Rideshare-Friendly Personal Insurance Policies

Yes, there are companies that offer flexible standard auto insurance policies.

These companies won’t drop you once they’ve found out that you’re a rideshare driver.

A good example is State Farm. If you have a State Farm policy you can add rideshare coverage to it very easily. Check out this article for details: State Farm Rideshare Driver Coverage

GEICO is another insurance company that offers flexible coverage. Find out more here: Learn About Ridesharing Insurance or in this video: Why You Need Rideshare Insurance

You may also want to consider Allstate: Allstate Ride for Hire or, for California drivers, Pacific Preferred: Best Auto Insurance Option for Rideshare Drivers

If you are in the military or in the direct family of someone in the military, USAA provides coverage for rideshare drivers. Check out their Ridesharing Gap Coverage to supplement your existing policy.

Erie insurance offers supplemental rideshare insurance for existing policyholders. The monthly premium is about $9 to $15.

Farmers has expanded its roster of products with rideshare supplemental coverage. This coverage is available in about half of the US states but it is relatively expensive compared to other policies.

Metlife offers a unique rideshare insurance policy for Lyft drivers. The monthly premium for this coverage is based on the miles that a Lyft driver works in any given month. The policy is available to Lyft drivers in Colorado, Illinois, Texas Washington, and California.

Progressive is another company offering insurance for rideshare drivers and they provide coverage in 26 different states.

Within Colorado and Illinois, Travelers can provide supplemental coverage for rideshare drivers.

Coverage to Expect from a Rideshare Insurance Policy

The typical auto insurance policy only provides coverage for a vehicle that’s being utilized for personal uses.

When you use your vehicle to work as a rideshare driver, understand that your personal insurance policy may not provide any coverage in case of an accident.

The TNCs like Uber and Lyft provide coverage while you have a passenger in your vehicle, but as explained earlier, they do not cover the period when you have their app open but have not accepted a ride request.

The TNC-provided coverage also has very high deductibles, typically $2500. That means if you are the at-fault driver in an accident, you will pay the first $2500 of the cost to repair your vehicle.

To protect yourself while operating as a rideshare driver you want to obtain insurance that does two things:

1) covers the period while you have a TNC app open but haven’t accepted a ride request

2) reduces the deductible amount to something more affordable like $1000 or $500

 

Evaluating Rideshare Insurance Options

With so many different rideshare insurance options out there, how do you pick the right policy for you?

Start by determining which of the insurance companies offer coverage in your state. Next, obtain quotes from those companies.

Be sure and ask if the rideshare policy is available by itself or only as an addition to an existing personal insurance policy. If a personal policy is required in order to obtain rideshare coverage, get a quote for that coverage as well.

If your current personal insurance provider offers supplemental rideshare coverage, they are likely going to be your best option but you still want to shop around.

Understand that insurance companies take these factors into account when calculating monthly rideshare insurance premiums:

  • The number of personal and rideshare miles driven
  • Your driving record
  • The amount of coverage you’re purchasing
  • The deductible amount
  • Your car’s make, model and year
  • Your city or state

Depending on these factors, taking out a rideshare insurance policy will likely cost you $6 to $20 per month.

Once you have quotes from all of the possible insurance providers your decision is mostly about which company is least expensive. 

Wrapup

Accidents could happen to anyone, even to the most careful rideshare drivers!

You definitely want to explore the supplemental insurance alternatives available for Lyft, Uber, Sidecar, and Carma. Do your research and make sure you have adequate coverage before you pick up your first rideshare passenger.

Taking out a ridesharing-friendly insurance policy is the best way to protect your financial future while on the road.