Ridesharing has changed transportation in countless cities and towns across America. By using your smartphone to download a rideshare app, you can find transportation to and from events, the airport or around town as a tourist. In many cases, ridesharing companies can offer cheaper alternatives to traditional taxicabs and other forms of transit.
These companies, such as well-known industry leaders Lyft and Uber, provide rideshare services by hiring independent contractors who use their own personal vehicles to ferry passengers around town. During busy times like price surging, rideshare drivers can make additional money with boosted fares based on increased demand.
While convenient for riders, ridesharing gets complicated when it comes to auto insurance. Most auto insurance policies purchased by individuals are meant to cover vehicles for personal use. Car accidents that involve vehicles used for rideshare are often complex because there’s a question of who is responsible for paying for the damages.
Is it the driver operating the vehicle? Is it the transportation network companies like Uber and Lyft that pay the driver for their services? As it turns out, the answer is more involved than you’d expect.
Auto Insurance Coverage for Ride-Sharing Drivers
All states require anyone who operates a motor vehicle to carry minimum legal liability coverage for their car, typically as a condition of vehicle registration. This liability insurance helps protect you in the event of an accident where you’re found to be at fault. Most insurance companies, however, dictate that these policies are used to cover someone who is using their vehicle for personal use.
What about people who are driving for a rideshare company? They’re using their cars to make money. Unless the driver has a commercial insurance policy or has paid for an endorsement to cover ridesharing, the existing insurance policy may not cover the accident. In most cases, the insurance carrier will deny any claim made under these personal auto policies if the accident happens while transporting a fare-paying passenger.
For rideshare drivers, Uber and Lyft have begun to offer liability insurance, but there are some caveats. This liability coverage kicks in after the driver’s carrier denies the claim (which means drivers must first submit claims to their own insurance company). This also means that these companies may be held financially responsible for your injuries if you’re involved in an accident with a rideshare driver.
Additional liability insurance for Lyft and Uber functions almost identically1 2. Depending on the driver’s current status, different tiers of insurance coverage are available. Generally speaking, rideshare insurance coverage works as follows:
- If the driver is offline or the app is off, the driver’s personal insurance company and coverage applies.
- If the driver is available or waiting for a request, Uber and Lyft maintain the following insurance coverage limits (if the personal insurance does not apply):
- $50,000 in bodily injury liability coverage per person
- $100,000 in bodily injury protection per accident
- $25,000 in property damage coverage per accident
- If the driver is on their way to pick up a rider or driving a passenger to their destination, the following coverage applies:
- $1,000,000 for third-party auto liability coverage
- Uninsured/underinsured motorist bodily injury coverage
- Contingent comprehensive and collision coverage up to the actual cash value of the car—subject to a $2,500 deductible.
Lyft and Uber Insurance Coverage for Passengers
Is Uber liable for accidents? Does Lyft cover you in an accident? If you’re injured in an accident while riding in an Uber or Lyft, you’re probably wondering how payment for your medical needs works. If the rideshare driver isn’t at fault, you’ll need to collect your payment or settlement from the insurance company of the driver who caused the accident.
In Uber and Lyft accidents where the driver is at fault, you might think that their insurance will cover you for your accidents. Unless they have a provision or endorsement on their auto insurance for commercial use, however, that may not be the case. Luckily, the third-party insurance listed above usually pays up to $1 million for personal injuries and property damage after the driver’s insurance has been exhausted.
How an Auto Insurance Claim Works if You’re Hit by an Uber or Lyft Driver
If you’re hit by an Uber or Lyft driver, you’ll want to follow all the regular steps that happen as part of an auto collision, especially if you’re not at fault. Call the police and exchange insurance information with the other driver. Lyft or Uber accident claims need to be resolved quickly, whether that means reaching out to the driver’s insurance company or to the rideshare companies themselves.
If the Lyft or Uber driver’s personal insurance policy does cover at-fault accidents, you will receive a settlement from them. If their insurance company doesn’t offer rideshare insurance, however, you’ll need to deal with Uber or Lyft directly.
Which insurance companies cover Uber and Lyft drivers?
Your insurance company may offer separate rideshare coverage endorsements, but it’s not a guarantee. Uber and Lyft rely on third-party insurance companies to help provide coverage for their drivers. The listed insurance companies below are based on Uber’s and Lyft’s current listed partner carriers.
What insurance companies cover Uber drivers?
- Allstate
- Farmers
- Liberty Mutual
- Progressive
What insurance companies cover lyft drivers?
- Allstate
- Liberty Mutual
- Mobilitas
- Progressive
- State Farm
If you’re planning on becoming a driver for a rideshare company, your best bet is to look for an insurance policy that will help cover you and your vehicle, particularly if you need comprehensive and collision coverage while driving to pick up fares or for your personal use.
Secure the Right Car Insurance for Your Needs with SelectQuote
If you’re considering downloading the Lyft or Uber app and putting it to work as a side hustle, it’s important to know how your insurance coverage works before you need it.
SelectQuote can help you shop for auto insurance coverage that lets you handle the work of transporting people without stressing about coverage. We compare rates and policies from several insurance companies at once. We’ll help you personalize your car insurance to meet your needs and look for discounts to save you money.
Sources:
1https://www.uber.com/us/en/drive/insurance/
2https://www.lyft.com/driver/insurance
