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ride-share car insurance

IMPORTANT:

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It is very inexpensive to add an addendum into an existing car insurance policy that covers your vehicle for use as a "transportation vehicle".  For an extra $15 to $30/month, you will have the peace of mind in knowing that you have all your bases covered. 

 

Ride-share drivers that do not add into their automobile insurance policy what is called a "ride-share" endorsement  are simply playing a financially dangerous game.

 

If I drive for Uber or Lyft, do I need ride-share car insurance?

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There is no quick answer to this question.  Let me explain.   Uber and Lyft are considered to be Transportation Network Companies (TNCs).  TNCs have to be insured for the services they provide.   TNCs are basically contracting their driver services to independent contractors.  Auto insurance companies consider the use of a vehicle to transport a passenger for a TNC to be "ride-for-hire".   While actively working (the driver app is online) for a TNC, the scope of coverage for drivers while they are working is really broken down into 4 different phases OR periods:

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  • PERIOD 0 - Driver app is turned off.  The personal car insurance coverage is in effect.

  • PERIOD 1 - Begins when the driver app is online (turned on) and the driver is waiting for a ride request.

  • PERIOD 2 - Begins when the driver accepts a ride request and then is en route to pick up the passenger.

  • PERIOD 3 - Begins when the passenger has entered the drivers vehicle and is en route to their destination.   As soon as the passenger has reached their destination and exited the vehicle, Period 3 has ended.   

 

Now we are back in PERIOD 1 again until either the driver app is turned off

(PERIOD 0) or until a ride request has been accepted (PERIOD 2).

 

Their independent contractors (Uber and Lyft drivers) are technically insured under the umbrella of Uber and Lyft during PERIOD 2 and PERIOD 3 only.    PERIOD 0 is always covered under the driver's personal automobile insurance policy.  PERIOD 1, though,  is considered to be a "gap" in coverage.   

 

Am I, the ride-share driver, personally liable for PERIOD 1?

 

Yes.  This is where "ride-share insurance" becomes applicable.  But wait, there's more to consider than just this gap in coverage during PERIOD 1.  

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In the case of an accident during PERIOD 2 or PERIOD 3, although Uber and Lyft have solid insurance coverage for their drivers, there is still the issue of deductibles.  The deductibles still have to be paid by the driver.

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  • Uber = $1,000 deductible

  • Lyft    = $2,500 deductible

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These deductibles should be considered.  Certain insurance companies, like

Allstate Insurance, have ride-share endorsements that will also cover these deductibles during PERIOD 2 and PERIOD 3.   

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We just want new drivers to be informed and aware of the financial risk involved with not having a ride-share policy.   Again, there is no reason for this to complicate the decision as to whether or not to drive for a TNC, such as Uber or Lyft.   All you have to do is call your insurance agent and add a "ride-share endorsement" into your policy.   It is well worth the extra money and literally $15 to $40 extra/month.

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In summary, there are two issues to be concerned about with regard to car insurance coverage for ride-share drivers.  Please ask your insurance agent these two questions:

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  1.  Does my policy cover my vehicle during PERIOD 1?

  2.  Will I be covered for the deductibles during PERIOD 2 and PERIOD 3?

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