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Ride-Sharing Insurance: What Drivers and Passengers Need to Know

Driving for Uber, Lyft or any other ride-sharing service can certainly drive up your income. However, it also can also hurt your finances if you don’t have the right types of ride-sharing insurance.

Follow along as we take you on a ride to explain the ins and outs of ride-hailing or ride-sharing insurance.

What drivers should know about ride-sharing insurance

Harry Campbell, founder and owner of The Rideshare Guy blog and podcast, explains that commercial auto insurance can cost $3,000 to $5,000 a year. It provides around-the-clock coverage, which is great if you’re a full-time cab or limo driver

But if you’re a ride-share driver — many of whom are part-timers — Uber and Lyft supply ride-sharing insurance under various scenarios.

The Insurance Information Institute emphasizes that a standard personal auto insurance policy does not cover ride-sharing. A personal policy stops providing coverage from the moment a driver logs into a ride-sharing app. And it ends the moment a ride-sharing customer exits the vehicle and the ride is over.

Different scenarios for ride-sharing insurance

Campbell explains that as it relates to insurance, ride-share driving falls into three periods when you have:

  1. Logged into the ride-sharing app and you’re waiting for pickup requests.
  2. Accepted a request and you’re on the way to pick up the passenger.
  3. Picked up the passenger and you’re heading to their financial destination.

During the first period — when you’re logged into the ride-share app and waiting for a ride — a ride-share driver receives liability from Uber and Lyft but no collision coverage, Campbell explains. And the liability limits are much lower than normal. The liability coverage is contingent coverage, meaning that it kicks in only if your personal insurer denies a claim.

The contingent liability portion covers $50,000 for the driver’s liability for bodily injury, $25,000 for property damage caused to others, and $100,000 per accident. Campbell says these limits are lower than you’d normally find with coverage from a traditional insurer.

Ride-sharing insurance for drivers who accept a ride request

In the second period, when you’ve accepted a ride request, Uber and Lyft provide commercial insurance. It gives you $1 million in liability coverage per accident and $1 million in uninsured/underinsured motorist. In addition, the policy includes contingent comprehensive and collision coverage. Again, contingent coverage kicks in only when your own primary insurance denies a claim.

Ride-sharing insurance for drivers who pick up a passenger

The third period begins when a ride-share passenger enters a driver’s vehicle and ends when the passenger leaves the vehicle. During this period, Uber and Lyft also offer liability and uninsured/underinsured coverage of $1 million. They also offer contingent comprehensive and collision coverage.

Uber imposes a $1,000 deductible for collision coverage in the second and third periods. At Lyft, the deductible is $2,500. There’s no deductible for coverage during the first period.

Campbell says Uber and Lyft provide “solid coverage” while you’re carrying a passenger or picking one up. But the associated deductibles greatly exceed those of typical personal auto insurance policies, he says.

Therefore, Campbell typically recommends getting a quote for ride-sharing insurance from a traditional insurer. A driver would have protection during the three ride-sharing periods and enjoy higher coverage limits, he says. “And you’ll never even have to deal with Uber’s or Lyft’s insurer.”

A 2017 survey by The Rideshare Guy found that 60 percent to 80 percent of ride-share drivers lack ride-sharing insurance.

The III recommends that ride-share drivers fully understand the terms and conditions of any ride-sharing insurance coverage. In addition, the institute says, they should contact their insurer to find out any gaps in their liability protection.

What passengers should know about ride-sharing insurance

Campbell points out that Uber and Lyft provide $1 million in liability insurance. So, passengers are always covered in case an accident happens.

If you’re a ride-share passenger or driver who’s been involved in a serious accident, Campbell suggests consulting a personal injury attorney. “I’ve heard too many stories of people that try to do it all on their own,” Campbell says. “They end up with nothing or start suffering aches and pains months after the accident.”