Rideshare Insurance for Drivers: How It Works and Where to Buy It

What Is Rideshare Insurance?

Rideshare insurance provides liability and damage coverage when driving for Uber, Lyft, or other ride-hailing companies. It provides primary coverage when the app is on and the driver is waiting for a ride request. Rideshare insurance covers gaps in a driver’s personal auto policy and the insurance policies provided by rideshare companies.

The rideshare industry has grown enormously over the last several years and is expected to be worth $285 billion by 2030. If you drive for Uber, Lyft, or another ride-hailing company, you’re helping to drive that growth and hopefully profiting in the success of the industry. However, you should also make sure that you’re safe while driving and transporting your passengers.

Your personal auto insurance doesn’t work when you’re driving for hire, so you’ll need business insurance. Uber, Lyft, and other rideshare companies offer insurance coverage while you’re en route to a customer and when the customer is in your car. Rideshare insurance fills the gap left over while your app is on and you’re waiting for a ride request.

We’ll explain how rideshare insurance works, what it costs, and where to buy it. By purchasing rideshare insurance, you can ensure that you and your customers are protected whenever you’re on the road.

Why Do I Need Rideshare Insurance?

There are three different insurance policies that work together when you drive for Uber, Lyft, or another ride-hailing company—your personal auto policy, your rideshare insurance, and the insurance that the rideshare company provides. Usually, the rideshare insurance is simply an add-on or extension to your personal auto policy.

Each policy kicks in during a different time period:

• Period 0: You’re driving, and your app is off. Your personal auto insurance covers you during this time.
• Period 1: Your app is on, and you’re waiting for a ride request. The rideshare company’s insurance will provide only liability coverage. For damage coverage, you need rideshare insurance.
• Period 2: You’ve accepted a ride request and are in transit to pick up the customer. The rideshare company’s insurance will provide coverage.
• Period 3: You’re transporting the customer. The rideshare company’s insurance will provide coverage.

Isn’t My Personal Auto Policy Enough?

Personal auto policies aren’t designed to provide coverage when a driver is using the car for business or commercial purposes. That’s why personal auto insurance only works in Period 0 when your app is off. During any other period, you need additional insurance to be covered.

Isn’t Uber’s or Lyft’s Insurance Enough?

Uber, Lyft, and most other major ride-hailing companies provide insurance for their drivers. Many drivers assume that this is all they need to be fully covered while ridesharing. However, Uber insurance and Lyft insurance are in full force only during Periods 2 and 3, when you’re in transit to pick up customers or have customers in your car.

During Period 1, Uber and Lyft provide only limited liability coverage—$50,000 bodily injury per person, $100,000 bodily injury per accident, and $25,000 property damage per accident. If you hit someone with your car and they sue you, Uber and Lyft will pay only up to these limits to cover property damage and bodily injuries to the other person and their vehicle. Uber and Lyft won’t provide collision coverage, comprehensive coverage, or uninsured/underinsured coverage during Period 1.

Collision coverage helps to repair or replace your car if you’re in an accident with another vehicle or object. Comprehensive coverage helps to repair or replace your car if it’s stolen, vandalized, or damaged in a fire or natural disaster. Uninsured and underinsured motorist coverage protects you if someone without insurance or without sufficient coverage limits hits you. You need rideshare insurance to have collision, comprehensive, and uninsured/underinsured motorist coverage during Period 1.

Rideshare insurance also provides excess coverage during Periods 2 and 3, over and above what the rideshare company’s policy provides.

Here’s another look at each rideshare period and which insurance applies:

Rideshare Period	Which Insurance Covers You	How Much Coverage
0 – App off	Personal auto insurance	Personal auto policies vary by insurer and state
1 – App on, waiting for ride	Rideshare insurance; limited insurance from rideshare company	Rideshare policies vary by insurer and state Uber and Lyft provide $50,000 bodily injury per person, $100,000 bodily injury per accident, and $25,000 property damage per accident
2 – Accepted ride request, in transit to customer	Full coverage from rideshare company; rideshare insurance provides excess coverage	$1 million liability coverage per accident $1 million uninsured/underinsured motorist coverage per accident Comprehensive and collision coverage up to the value of your car if you have these options on your personal auto policy
3 – Transporting customer	Full coverage from rideshare company; rideshare insurance provides excess coverage	$1 million liability coverage per accident $1 million uninsured/underinsured motorist coverage per accident Comprehensive and collision coverage up to the value of your car if you have these options on your personal auto policy

 

Is Rideshare Insurance Available Everywhere?

Rideshare insurance is not available in every state. Since this is still a relatively new type of insurance, most insurance companies limit coverage to certain states. If rideshare insurance isn’t available in your state, then you’ll need full-fledged commercial auto insurance while driving for a rideshare company. Some localities, including New York City, require rideshare drivers to purchase commercial auto insurance and apply for a commercial driver’s license.

If you’re driving in a state where you’re unable to find rideshare insurance, the best option is usually to call up your personal auto insurance and ask them whether they’d cover an accident that happens while you’re ridesharing. Some companies might accept claims from rideshare drivers or offer alternatives for gap coverage. If the answer is no, it’s best to either avoid rideshare driving or obtain commercial auto insurance. Fortunately, many insurers are working on expanding rideshare insurance nationwide.

Cost of Rideshare Insurance

Annual premiums on rideshare insurance range from about $15 to $120 per year, making this one of the most affordable types of insurance. The cost varies according to the insurer, the specific policy, and the state where you’re driving. The table in the “Where to Buy” section gives you an estimate of how much different insurers charge for rideshare insurance.

In addition to your annual premiums, you also should note any deductibles in your policy. A deductible is a specific amount of money that you have to pay before the insurance company will pay out benefits. Your personal auto policy and rideshare company policy could have deductibles. Deductibles are most common on collision and comprehensive coverage. During Periods 2 and 3, Uber charges a $1,000 deductible for comprehensive and collision coverage. Lyft charges a $2,500 deductible.

John Frigo is a digital marketing lead at MySupplementStore and former rideshare driver. Frigo says, “Transporting customers is a lot of responsibility. If someone were to be injured in your car, it could be a costly nightmare of a situation, so it’s best to be covered as much as possible and have your own insurance in addition to whatever the rideshare company provides. I got my rideshare insurance through State Farm. It was only about $15 to $17 extra per month [on top of my personal auto insurance premium].”

How to Buy Rideshare Insurance

When you’re in the market for rideshare insurance, the best place to begin is with your personal auto insurer. In most cases, insurers will simply extend your personal auto policy to cover rideshare driving. If your personal auto insurer doesn’t offer rideshare insurance or doesn’t offer it in your state, then you might need to switch your personal auto policy to another firm. Most insurers do not offer stand-alone rideshare coverage.

Before approaching your auto insurer, be sure to have the following information ready to go to get a quote:

• Car year, make, and model
• Which ridesharing companies you drive for
• Average number of monthly rideshare trips and average number of miles driven per trip
• Driving record
• Copy of driver’s license (including for anyone else who’ll be driving the car), vehicle registration, and title
• Policy number for your current personal auto policy

If you’re unsure about how many miles you’ll be driving for Uber or Lyft, you can always look up your prior trip history to get an estimate or use a mileage tracking app.

Where to Buy Rideshare Insurance

Most of the major car insurance companies provide rideshare insurance. Tony Arevalo, founder of Carsurance, is an insurance agent and a former Uber and Lyft driver. Arevalo says, “Drivers are limited to a few large carriers for rideshare coverage. To keep premiums down, get quotes from all the carriers that offer rideshare coverage, and keep your driving record free of violations and claims.”

Here’s a summary of major insurance companies that offer rideshare insurance, along with where they offer it and how much they charge.

Insurance Company	States Where Coverage Is Available	Approximate Cost
State Farm	AL, AZ, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, ND, OH, OK, OR, PA, SC, TN, TX, UT, VA, WA, WV, WI, and WY	Adds 15 to 20% to current premium
Geico	AL, AR, AZ, CA, CO, CT, DC, DE, FL, IA, ID, IL, IN, KS, LA, MA, MD, ME, MN, MO, MS, MT, ND, NE, NH, NM, OH, OK, OR, PA, RI, SC, SD, TN, VA, VT, WA, WV, WI, and WY	Est. $269 per month based on sample quote (covers personal and rideshare driving)
Allstate	AK, ID, IL, MI, MN, MT, NJ, NM, NV, NY, OR, UT, WA, WI, and WY	Adds $15 to $20 per year to current premium
Progressive	AL, AZ, AR, CO, CT, DC, FL, GA, ID, IL, IN, IA, KY, LA, ME, MA, MI, MN, MS, MO, NE, NM, ND, OH, OK, PA, RI, SD, TN, TX, UT, VA, WA, WV, WI, and WY	Pricing unavailable
Farmers	AZ, AR, CA, CO, GA, IL, IN, IA, KS, MD, MI, MN, MO, MT, NE, NV, NJ, NM, ND, OH, OK, OR, TN, TX, UT, and WI	Adds 25% to current premium
Safeco	AZ, CO, IL, IN, KS, MN, MO, OK, OR, TN, UT, WA, and WI	Adds less than $10 per month to current premium
Erie	DC, IL, IN, KY, MD, NC, OH, PA, TN, VA, WV, and WI	Pricing unavailable
Metlife	CA, CO, IL, TX, and WA	Pricing unavailable, but coverage applies during all periods
Mercury	AZ, AR, CA, NE, NV, NM, OK	Adds $0.20 per day to current premium
MetroMile	AZ, CA, IL, NJ, OR, PA, VA, and WA	Base monthly fee plus per-mile fee
Travelers	CO and IL	Pricing unavailable
USAA*	AK, AL, AZ, CA, CO, CT, DC, DE, FL, GA, ID, IA, IL, IN, KS, KY, LA, MA, MD, ME, MN, MO, MS, ND, NE, NH, NJ, NV, OH, OK, OR, TN, TX, UT, VT, WA, WI, WY, and WV	Adds $6 per month to current premium

*USAA only provides insurance for current and former U.S. military members and eligible family members.

Allstate, Safeco, and Mercury are the most affordable options for rideshare insurance, but their coverage is only available in a handful of states. State Farm is the best option for rideshare insurance in terms of cost and availability. The insurance carries over your personal policy deductible and limits while you’re ridesharing. Plus, other personal policy benefits, like emergency roadside assistance and rental car reimbursement, also become available while ridesharing.

With so many insurers providing rideshare insurance, you might not know where to start. Car insurance marketplaces like Insurify help you compare quotes for rideshare insurance from different insurers.

Photo credit: Insurify.com

Bottom Line on Rideshare Insurance

Rideshare insurance is essential if you’re driving for Uber, Lyft, or a similar ride-hailing company. No matter how careful you are or how clean your driving history is, there’s always the chance that an accident could occur or another driver could hit you.

You should always carry proof of insurance while driving, whether for personal use or ridesharing. If you experience an accident, make sure you report the accident to the police and get the other driver’s insurance information. You should file a claim with your personal auto insurance company, as well as with Uber and Lyft’s insurance provider. The insurance companies will work out who pays what part of the claim.

Remember, your personal auto policy won’t work while your rideshare app is on, and the insurance provided by Uber and Lyft doesn’t cover all the gaps. To be covered at all times while driving, you should get a ridesharing extension to your personal auto policy. Fortunately, dozens of major insurance companies offer ridesharing coverage, and it’s becoming available in more states over time.

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