The rideshare industry is growing and just keeps expanding. This means that in theory, the demand for rideshare insurance should be growing, too. But, that is not the case, in fact, about 90% of drivers that are a part of Uber or Lyft do not have rideshare insurance.
Why is this a big deal? Well, rideshare and insurance companies see a few different phases of rideshare. They are as follows:
Period 0: Your app is offline and you are covered by personal auto insurance
Period 1: Your app is online, waiting for requests. Your personal auto insurance does not cover you at this time, nor does the insurance bought via rideshare company.
Period 2: You have received a request and if you have insurance through Uber and Lyft, you are now covered.
Period 3: You are now carrying passengers and you are covered by the rideshare companies’ policy.
So, as you can see there is a gap where you would not be covered. If an accident occurs during Period 1 you could get stuck paying for 100% of the damages. But, that is not the only reason you should highly consider obtaining rideshare insurance.
Without rideshare insurance, you run the risk of having your insurer drop your personal auto insurance coverage. Reason being, is that you must specify that you are using your car to make money because it is not covered under traditional auto insurance. After you are dropped, your premium will significantly increase since you are now considered high risk.
Another possible obstacle is that not all states offer rideshare insurance yet. The prices also vary from state to state and company to company so be sure to receive about three rideshare insurance quotes to ensure the best deal for your needs.
However, the good news is that there are many options to ensure that you are appropriately covered. You need a policy in some form since you are technically using your vehicle for commercial use since you are making money from driving. So, that being said, if your state does not offer rideshare insurance or if it is a better fit, you can opt for commercial auto insurance.
There is also an option to purchase Period 1 coverage to close the gap of the insurance you may already have directly from Uber or Lyft. Some insurance companies even offer an agreement where they will not drop you as long as you disclose that you are a rideshare driver. The only catch is that they will not cover you while your app is online, so experts recommend that you only use this option if you do not move around a lot while waiting for requests and if you have insurance from the rideshare company. Also, be sure to double check with your insurance provider that this is the case to avoid a situation where they would drop you, at all costs.
Ultimately, it comes down to a few things one of which being your state’s law. As states have laws on personal auto insurance, many are adding laws regarding rideshare insurance as well and the minimum coverage you need. This should be a prime motivating factor. Additionally, you should consider how you plan to handle an accident of any scale during Period 1 of a driving session. As previously mentioned, it could easily wipe out your bank account without careful consideration.
Therefore, as a rideshare driver or if you are planning to become one it is crucial to seek out rideshare insurance. Even though your premium may increase slightly, it is affordable, especially relatively to having to pay for all of the damages of an accident. Additionally, many insurance companies allow you to add on to an existing auto insurance policy instead of issuing an entire new one which is extremely beneficial to you as a customer. So, overall it is not only vital, but also well worth it to have rideshare insurance.