Uber and Lyft Drivers: How Rideshare Insurance Can Protect You (and Your Income)

rideshare insurance

Driving for rideshare services such as Uber or Lyft is increasingly popular, and it’s no wonder. There are nearly 8 million rideshare app users worldwide, making these companies a lucrative side gig or even full-time job for drivers.

New drivers sign up every day, but many of them don’t consider the risks of doing so. In most cases, your personal car insurance won’t cover you while you’re on the clock. And though both Uber and Lyft offer insurance to their drivers, the policies only cover you part of the time.

Get into an accident outside your coverage window, and you’re on your own.

When launching a side gig, the last thing you want to deal with is additional startup costs. But when it comes to protecting yourself, rideshare insurance is a necessary expense that can end up saving you thousands.

Insurance policies of major rideshare companies

If you signed up to drive for Uber or Lyft, you might dismiss the idea of getting additional car insurance. Why would you pay for something that these companies already provide? Unfortunately, the insurance you get might not be as comprehensive as you think.

Harry Campbell, the rideshare expert behind The Rideshare Guy, advises drivers to get their own insurance, since company policies can be inadequate.

“There are quite a few shortfalls of relying on Uber- or Lyft-provided insurance,” Campbell said. “Lyft and Uber don’t provide collision coverage during Period One [the period where the rideshare app is on but there are no customers in the vehicle], and they only provide lower liability limits for coverage during Period One.”

That means that while you’re waiting for a passenger, rideshare company insurance only provides liability coverage, not collision or comprehensive insurance. If you injure someone during this period, their medical expenses could be covered. But if you’re in an accident and your car is damaged, you could be held responsible for the cost of repairs.

In addition, the liability insurance is lower during this stage than it would be if you had a customer in your car. For example, Uber only provides a maximum $100,000 in injury liability coverage during the stage when you’re waiting for passengers, as compared to $1 million when a rider is in your car.

Why you need additional rideshare insurance

You might not be concerned about coverage gaps in a Lyft or Uber insurance policy. Your personal car insurance will cover you when you don’t have a customer — right? Probably not.

In most cases, your insurance won’t cover you when you’re working for a rideshare company. You might even be putting your own coverage at risk.

“[One drawback is] the potential to be dropped by your insurance company if they find out you’re driving as a rideshare driver, regardless of whether or not you’re in an accident,” Campbell said. “This could lead to higher personal insurance rates if you’re dropped.”

Even in situations where an Uber or Lyft insurance policy would cover you in the case of an accident — such as when you have a passenger in your car — you could end up owing money out of pocket. In most cases, you have to cover the cost of the deductible, which can be substantial.

“Uber and Lyft provide commercial insurance with $1 million in liability coverage, but there’s a $1,000 deductible on Uber and a $2,500 deductible on Lyft,” Campbell said.

Adding additional ridesharing insurance to your personal policy is an important investment that can help protect you and your vehicle in the case of an accident.

Because company-provided insurance doesn’t cover collision or comprehensive damages in all instances, a rideshare insurance policy with comprehensive and collision coverage ensures you won’t have to pay for everything out of pocket.

“In many cases, the minimal added expense of a rideshare endorsement to a current auto policy is worth the peace of mind of being covered in case of an accident,” Campbell said.

“No one expects to get into an accident while driving,” he added, “but if they are in one, it’s much better to be covered entirely than have to deal with injuries, car repairs, and insurance.”

How much does rideshare insurance cost?

Most rideshare policies are inexpensive, but your monthly rate is dependent on factors like the type and year of the car you drive, your driving record, and where you live.

Prices for a ridesharing policy can vary widely. “I’ve seen everything from an additional $6 per month to $100 per month (on top of regular auto insurance),” Campbell said.

However, you could lower your expenses with the following tips:

  • Combine policies: Bundle your rideshare insurance policy with your home or renter’s insurance policy.
  • Ask for a price cut: Ask your insurer for discounts, such as military, student, long-term customer, and clean-driving discounts.
  • Shop around: Compare offers from several different insurers.

If you’re ready to purchase a policy, it’s important to know that not all insurers offer rideshare insurance or are even familiar with services like Uber. This list can give you an idea of which insurers offer policies in your state.

It’s a good idea to start with your current car insurer, when possible. Call your agent and ask if they offer rideshare or commercial driving policies and get a quote for the number of trips and mileage you do in a month. You can compare that estimate with offers from other insurers to get the best price.

Protecting yourself on the job

Driving for rideshare services like Uber can be a great way to earn extra money, but a single accident could wipe out your savings. Investing in a rideshare insurance policy provides necessary protection and peace of mind.

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