Picking the Best Rideshare Insurance

Ridesharing has seen its fair share of huge profits in recent years.

According to a research study conducted by an online statistics site, Uber has reported a whopping $11 billion profit for the year 2020. Though this figure dipped a little from its $13 billion mark in 2019, it is still a testament to how profitable this industry has become.

And if you are the type of vehicle owner who looks for a productive way of spending their free time or another income source, you may be interested in this side hustle of servicing passengers or guests. But before you become so excited for the profit and bonuses that this system may offer, you may want to check the insurance and security measures available for you as the driver.

Though we do not know you personally, we definitely agree that the last thing you may want is to be involved in a traffic incident, no matter how severe it is. Now imagine being involved in an incident while you’re carrying passengers or on your way to pick them up.

Though giant ride-sharing firms such as Uber and Lyft have implemented their versions of commercial insurance for their drivers, it does not cover the driver at ALL stages of the trip. This means that there are certain times that you will not be covered by this insurance, and during these times you may be more vulnerable to stressful incidents that would require you to spend a ton of money straight from your pocket. Not to mention the physical stress of attending to all of the liabilities incurred after an incident.

In this article, we will present to you in detail how you can achieve security and maximize your insurance coverage so you won’t be troubled by these issues while you earn your profit doing ridesharing.

Ridesharing Insurance 101: Sharing the Basics with You

Before we start digging deeper, we know one of your most general questions must be: how does ridesharing insurance coverage work? To provide you with a bird’s-eye perspective, rideshare insurance acts as a bridge over the gap between the coverage of your personal auto policy and the employer-provided insurance coverage mandated by the law.

But before we explore ridesharing insurance more, let us briefly review basic insurance coverage.

You may well know that before you can purchase a personal vehicle, you may be mandated by law to purchase auto insurance coverage. Depending on your financial capability, you may go for the minimum requirement set by the state. Or you may opt to purchase additional insurance coverage, which is a wise move considering that the minimum insurance has so many limitations.

Some of the general insurance coverages that you may enjoy in your personal auto policy include

  • Bodily Injury Liability. As the term suggests, this refers to the physical injuries or death that the policyholder causes to other people while driving. This will also cover the injuries caused by other drivers while at the helm of the policyholder’s car. If you are a family member of the policyholder and your name is listed on the insurance policy, you will also be covered. You may also benefit from this if you are driving another person’s car (with their permission).

In simpler terms, this will cover you if you injure or kill another person while you are driving. This coverage can also provide you with a legal defense if you are facing a lawsuit filed against you.

  • Property Damage Liability

This liability covered by the mandatory policy is for property damage in case of an accident. This will cover the other cars involved or other property such as utility poles, speed barriers, houses, buildings, and more. It may also be used for legal defense if the other party has filed a lawsuit against you because of the accident.

Aside from this basic coverage, here are some common coverages that may be required or available in most US states. If you own a vehicle, these are the most common coverages that you should consider.

  • Personal Injury Protection (PIP)

Also called Medical Payments coverage, this will cover the medical fees that are used for you or your passengers. This will cover all the individuals in the policyholder’s car at the time of the accident.

This will be used to cover fees for emergency billings, other medical fees, lost wages due to the accident, and other related expenses. This may also cover the replacement services fee for the work normally done by a person involved in the accident. Sometimes, this may be stretched to cover the funeral expenditures of a person involved.

  • Coverage for Uninsured Motorists

Sometimes, you may get involved in an accident involving uninsured drivers. In these situations, you can be reimbursed through coverage for motorists without insurance, provided that they are the ones who caused the accident. This will also cover the victims of a hit-and-run. In cases where the driver is insured but does not have adequate coverage to pay for serious accident costs, you may purchase underinsured motorists’ coverage.

  • Collision Coverage

With this insurance coverage, you can be reimbursed for expenses that result from the damages to your car if you collide with another vehicle or with properties and objects. The latter covers daily objects near the road such as speed barriers, guardrails, and utility posts. This can also be used if your vehicle is damaged as you drive through a pothole or if your car flips over.

  • Coverage for Glass Damages

This insurance coverage will assume your cost liabilities on occasions that the glass parts of your car, such as windshields and rear glass shields, are damaged.

This may also include damages to the windows, glass sunroof, panoramic roofs, and moonlight roofs. The costs of damage to these parts may be reimbursed if you purchase additional glass coverage.

  • Comprehensive Coverage

Most of the offered comprehensive coverages include damage to your vehicle from almost all sources other than collision. This commonly covers damages caused by floods, fires, earthquakes, snow, hail storms, animals, or falling objects. Human-caused damages are also covered, such as theft, vandalism, and riots. Moreover, it can also reimburse the costs for the damage of seemingly otherworldly causes such as missiles and explosions—even the damages caused by a falling asteroid.

But as maximized as it can be, personal auto insurance policies generally do not cover you or your car while it is in “business use.” This means that if you are earning a profit using your car, you may not be covered by the insurance policy that you have purchased.

Also, your personal auto policy likely has some limitations on the extent of coverage they offer. The government has mandated Transport Network Providers (TNC) like Uber and Lyft to provide insurance coverage to their drivers. When you sign up to be a driver for Uber or Lyft, they provide you with commercial insurance coverage through their apps.

Commonly, these companies treat your job as a rideshare driver according to different time frames, like the following:

  • Offline: If you are a driver for Uber or Lyft, you will be given access to their driver’s app. Whenever you want to serve passengers, you will log in to their system using this app. But if you are offline or not signed in, you will not be covered by Uber or Lyft insurance. Instead, you will be protected by your personal auto policy.
  • “Waiting for Passenger Request” Period: Sometimes, you may be logged in to the driver’s app of your TNC and waiting for a passenger assignment. During this time, though you are logged in, you will not be covered by the employer-provided insurance coverage because you do not have a passenger yet. Yet because you are logged in, you will be viewed as “on the clock” or “in business” during these times. Hence, it is highly likely that you will not be covered by your personal auto policy.
  • “On the Way to Pick Up a Passenger” Period: The insurance coverage set by your TNC starts to kick in during this period. After you have been assigned a passenger and you are driving to pick them up, the commercial insurance will be activated. However, this insurance coverage is generally seen as limited. As per research, Uber’s and Lyft’s driver insurance provides coverage of $50,000/person, $100,000/incident, and $25,000 for damages to property.
  • “Service in Progress” Period: This is the period after you have picked up your passenger and are en route to drop them off at their location. Like the third period, you will be protected by commercial insurance. But after you drop your passenger off, you will return to the “Waiting for Passenger Request” period, and it is again highly likely that you will be covered either by your personal auto policy or the TNC-provided commercial insurance coverage.

A glance at these simplified points will tell you that you are not covered by your personal auto insurance and employer-provided insurance end-to-end.

There are gaps that leave you vulnerable to sky-high medical and damage costs if an accident happens at that time.

This is where the importance of ridesharing insurance comes in. It serves to bridge those gaps so you will be covered at all points of your ridesharing experience.

Generally, insurance providers sell three types of ridesharing insurance coverage.

  • Ridesharing insurance endorsement: With this type, the ridesharing insurance coverage is like an “add-on” to your already existing personal insurance policy. As stated above, the extra coverage of this add-on will save you from the unwanted hassles that result from the gaps between the TNC-provided insurance and your insurance policy.
  • Full ridesharing insurance policy: On the other hand, some providers sell a combination of personal and business coverage in one policy. Generally, a personal insurance policy cannot be used if you are using your car for business. A full rideshare insurance policy is like a “two-in-one” policy that you can use while you are driving a passenger to their destination or while you are out getting groceries on the weekend.
  • Commercial for-hire livery policy: More commonly used for businesses such as taxi services, a for-hire livery policy can also cover a rideshare driver. However, the premium you need to pay per month is generally much larger because these policies were not originally intended for rideshare drivers. But like the second type, it will cover you for both the personal and business uses of your vehicle.

In insurance terms, a deductible is the amount of money you need to pay straight from your pocket to a covered claim. Generally, a TNC-provided insurance policy carries a higher deductible than a personal insurance policy.

The deductibles for employer-provided policies often range from $1000 to $2500 depending on the company you work for. Thus, if you are involved in an accident during a period that is covered by the commercial insurance, you have to pay the first $1000 or $2500 straight from your pocket before the insurance will pay the remainder.

Ridesharing insurance can help you bridge the gap between your personal insurance deductible and the TNC-provided insurance deductible.

Suppose that your insurance policy’s comprehensive coverage deductible costs $500, and the TNC-provided commercial policy costs $1500. The ridesharing insurance will be there to help you settle the $1000 difference between the two deductibles.

Debunking Myths and Answering Frequently Asked Questions (FAQs)

  • How much will ridesharing insurance coverage cost me?

There is no single way to answer this question. It generally depends on several factors, such as your geographical location, years of driving experience, claims history, age and condition of your car, your credit history, and many others.

But typical insurance companies offer add-on rideshare insurance coverage for $6-$15 per month, depending on the company.

It is a good idea to contact a local insurance agent to be informed about the best insurance coverage for you. Also, ridesharing insurance coverage is not available in states, so you have to make sure.

  • What if ridesharing insurance is not offered in the state where I live?

In this case, you may want to purchase a commercial insurance coverage policy. This will protect you, your passengers, and your property if you meet an unfortunate incident.

As stated above, your auto policy will not cover the damages to your car if you have been in an accident during business hours. Thus, it is advisable to get separate insurance coverage for your car if you are intending to use it for business purposes such as ridesharing.

  • I am a delivery driver. Is it important that I have rideshare insurance as well?

Like a rideshare driver, a delivery driver such as those who are working for Uber Eats or GrubHub can also benefit from adding a rideshare insurance policy.

Just like Uber and Lyft drivers, they are also protected by a commercial insurance policy only while en route to the restaurant to pick up an order or while delivering it to the customer. So, they are vulnerable during the times that they are waiting for an order or when not logged in. Having ridesharing insurance will make sure that you are protected at all times during your delivery services.

Importance of Purchasing Auto Insurance

With all of the details explained above, you may be more convinced now that getting ridesharing insurance coverage is a smart move. In addition to being protected from huge financial strains if you get involved in an unfortunate accident, there are also additional benefits to having such a policy.

  • It can give you peace of mind to know that you and your passengers are protected against anything bad that may happen while on the road
  • Acquiring auto insurance will help you avoid expensive damage costs
  • It can save you so much time as you don’t have to settle so many tedious negotiations
  • Ridesharing insurance coverage can help you respond to any obligations during the periods that you are uncovered by the TNC-provided insurance and your insurance policy

If this article convinced you to acquire ridesharing insurance or to upgrade your current policy, feel free to reach us through our contact page. We will be more than happy to help you be insured and safe while you earn a decent profit doing ridesharing on the Florida roads.

We wish you safe trips and bookings ahead!



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