Uber doesn’t have insurance services. However, the situation is not relatively that straightforward. If you haven’t been driving for monetary gain in the past, you are most likely getting coverage. As a professional driver for Uber or Lyft (even if you only drive for a few hours a week), you’ll need a particular insurance policy to cover your activities.
As ride-hailing services such as Uber and Lyft have gained popularity, the cost of rideshare insurance is usually only a small percentage higher than the cost of standard insurance.
Moreover, you can do this in a few states like Alabama, New England, Ohio, Tennessee, Massachusetts, Illinois, Georgia, and Texas, among others. You must know if companies offer insurance services over there.
Give your insurance provider a call to determine if your company and your state offer ridesharing insurance coverage for you.
If you cannot obtain ridesharing insurance, you must purchase commercial automotive insurance to get the coverage while driving.
Do Uber and Lyft offer insurance packages?
Uber and Lyft provide automatic coverage for your vehicle up to a specific point when you drive for them. Both businesses offer $1 million in liability insurance packages. Coverage works only on the route when you are looking for a passenger, maybe while actively transporting a passenger, not while in transit.
The coverage is limited when you used the app driving and logged on but are now working or going to work.
If you don’t install your ridesharing app and are ready to accept rides, your insurance will not cover you.
How do I get rideshare Car Insurance?
Suppose you work for Lyft or Uber. The key to selecting an insurance plan that meets your needs, also, filling in the gaps is shopping around.
Additionally, ridesharing companies such as Uber and Lyft offer insurance packages worth investigating. You’ll almost certainly find a better bargain with your current insurance provider. So, contact your agent and ask if they can assist you in finding rideshare insurance.
Will my insurance company know if I drive for Uber or Lyft?
Regarding insurance, your insurance company has no way of knowing if you work for Uber or Lyft. By obtaining proper insurance while driving for Uber or Lyft is not time-consuming.
Next, find a policy that provides coverage for all eventualities, and you’ll be good to go.
Maintaining your automobile insurance coverage is essential. However, ensuring that you receive the best possible rates for your particular scenario is also necessary.
How Uber and Lyft Classify Their Drivers and Why It Matters
‘Rideshare’ services such as Uber and Lyft are in direct competition with taxis and other more traditional modes of transportation. In addition, because Uber and Lyft do not own or operate vehicles, they avoid treating drivers as employees. Instead, they seek to regard them as independent contractors.
Companies must adhere to this classification to avoid being held liable for accidents or damage while drivers are on the job.
Individuals who work as independent contractors are typically responsible for the repercussions of their negligence whereas an employer generally is liable for the consequences of an employee’s carelessness.
Find out more about the guilt of employers in car accidents. Even in the face of legislative efforts to have drivers categorized as employees, it’s uncertain whether or not these ridesharing companies will be able to continue to hide behind the “independent contractor” argument.
Law is the “AB5” in California. For example, it works to safeguard Uber and Lyft drivers (these are the “gig workers”). It also makes it more difficult for businesses to argue that rideshare drivers and delivery individuals are not their organizations’ employees.
How Does Car Insurance Work for Uber and Lyft Drivers?
It was a considerable challenge for Uber and Lyft to get insurance coverage for their drivers when they first started because most did not have business insurance plans. Instead, they had standard personal insurance plans, which all prohibit coverage if the customer uses the car for business reasons while they have the coverage.
It’s not difficult to comprehend why: According to its assessment of the possibility of an accident and a claim, the insurance company determines whether or not to offer coverage (and, consequently, how much to charge for it) (the higher the risk, the higher the premium).
The risk of a claim is substantially lower when you use a vehicle for personal reasons instead of when you use it for commercial purposes (the sheer number of miles and hours on the road go way up when you use a vehicle commercially).
As a result, when someone uses the car to drive for business, they need to purchase a commercial insurance policy. This one is substantially more expensive than personal insurance coverage.
Commercial insurance policies for Uber and Lyft drivers would provide excellent protection. Still, the premiums are costly, and only a few drivers opt for this form of coverage.
How Insurance Companies Understand Ridesharing
Ridesharing businesses and insurance companies divide a driver’s time into three phases, referred to as “periods” in other contexts. If a motorist closes the app, they don’t need to be driving while in “driver mode.”
Next, you complete and send the application.
Period 1: The driver is driving around with the app on his phone, seeking somewhere to dine—period 2.
Period 2: The driver has been paired with a suitable rider and is en route to the pick-up spot. A three-minute period begins when the rider enters the vehicle and concludes when the rider exits the vehicle.
What Happens When a Lyft or Uber Driver Has an Accident?
Examine the following scenario: An Uber driver causes an accident that involves injuries to someone else, either the passenger or a third party, and property damage. After the accident, the injured people file a claim against the driver’s liability insurance policy, requesting that the driver’s carrier cover their medical expenses.
Meanwhile, the driver filed a lawsuit against his collision insurance policy, demanding that the carrier cover the physical damage to his car that resulted from the accident.
During an investigation by the insurance adjuster, they had used the automobile to transport an Uber passenger, which is considered for business use and does not fall under the coverage of the driver’s insurance policies. The claims adjuster, who is a lawyer, analyzes those claims.
Furthermore, they will almost definitely cancel the driver’s insurance coverage since the driver was in breach of the insurance policy terms at the time of the collision (that he uses the car only for personal trips, not commercial ones).
As a result of the outcome, this is a tragedy for everyone. The parties to who the driver has been injured must resort to suing the driver personally, and it’s a safe bet that the vast majority of Uber and Lyft drivers aren’t flush with cash to cover medical bills and expensive property damage. Can’t we develop a more effective way of dealing with this situation?
Ridesharing and insurance
You’ll need a business auto insurance or a personal auto insurance policy with ridesharing coverage included as an endorsement if you want to start driving for rideshare companies.
Uber’s insurance policy does not protect you if you close the app while driving, which you should be aware of as a rideshare driver. Your personal automobile insurance policy will provide coverage for you during these conditions.
Because the liability coverage provided by Uber’s insurance is only active when the app is open and only applies at specified points throughout your ride, it is essential to understand how it works.
Depending on the terms of your rideshare-friendly insurance policy and the conditions of the journey, the coverage provided by your rideshare-friendly insurance policy may extend to other sections of the trip.
Insurers employ three critical coverage periods to distinguish between ridesharing and typical trips: the first, the second, and third primary coverage periods.
You’ve downloaded and activated the Uber app but haven’t received a ride request yet.
The second period begins after you have agreed to a ride request and is on your way to pick up a passenger from an airport or train station.
During the third period, the passenger has boarded your vehicle. This period comes to an end when the passenger exits the car.
It is critical to understand whether your insurance or Uber’s insurance policy will provide coverage during each specific period. It works if you have an accident while working for the firm to prevent a delay or a denial of your claim by the insurance provider.
What does Uber insurance cover?
Uber’s Driver-Partner Insurance provides varying levels of coverage depending on whether you’re in Periods 1, 2, or 3. Whether or not you have a passenger in your vehicle significantly impacts your range.
Insurance coverage is provided throughout Period 1 of the contract.
During Period 1, Uber’s liability limits perform to a bare minimum. The firm does not provide comprehensive or collision coverage during this portion of the journey.
Also, it goes up to $100,000 per incident for property damage, with a maximum of $25,000 in damage coverage. During this portion of the journey, it does not give comprehensive or collision insurance coverage.
Insurance coverage during the second and third periods
Your liability policy is adequate, but your collision and comprehensive coverage are subject to certain restrictions.
In a covered accident while on your way to pick up passengers or while transporting them, Uber will reimburse you for up to $1 million in third-party liability insurance coverage.
The uninsured/underinsured motorist bodily injury coverage provided by Uber protects you and your passengers. Suppose you are involved in a covered accident with another driver who is at fault and uninsured or underinsured. All this, as long as you are not at fault and the other driver is not at fault.
Collision and comprehensive insurance
Uber provides comprehensive collision insurance that will cover your vehicle up to the vehicle’s cash value. On the other hand, this coverage is conditional and comes with a $1,000 deductible. Because of the deductible, you’ll need to pay $1,000 out-of-pocket before Uber’s insurance will kick in and settle your claim.
Uber’s coverage limits, particularly in liability, can leave gaps in coverage that increase your out-of-pocket expenses, if your vehicle is damaged or totaled and if you and other passengers are hurt and incur medical bills, you should seek legal advice.
Most insurance experts recommend that you carry $100,000 in bodily injury coverage per person. According to the company, Uber’s insurance coverage falls far short of these benchmarks.
If you regularly drive for Uber or Lyft, your insurer may need you to complete this step. They can inquire about your mileage and may even send someone to inspect it if they find that you have accumulated more than 25,000 miles when you regularly travel 7,000 miles per year. All this depends on how much you believe it is.
If you have comprehensive collision coverage on your auto policy, Uber will additionally maintain insurance on your behalf. When you go online, this insurance kicks in and protects you from physical damage to your car up to its actual cash value, regardless of who is at fault.
You must pay a $2,500 deductible before this coverage takes effect. Depending on the car, a $1,000 deductible may apply to certain vehicles purchased through the Vehicle Marketplace.
Nicholas J. Banks has been an expert in the Insurance industry for over 10 years. He is well-versed in all aspects of insurance, and he has worked on Allstate Ins Group since 2006.
He attended the University of Pennsylvania with an undergraduate degree in Business Administration, followed by a Master’s degree from the University of Southern California to further his career in Insurance Management.
His experience working with many different companies has helped him develop valuable insight into how to succeed in this exciting field, which he now shares through our blog “Pro Insurance Info.”