The rideshare industry is growing and continuing to expand. This means that, in theory, the demand for rideshare insurance should also grow. But that’s not the case, in fact about 90% of drivers who are part of Uber or Lyft don’t have rideshare insurance.
Why is this a big problem? 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 car insurance
Period 1: Your app is online and waiting for requests. Your personal auto insurance policy will not cover you at this time, nor will any insurance purchased through a rideshare company.
Period 2: You received an application and if you have insurance through Uber and Lyft, you are now covered.
Period 3: You are now carrying passengers and you are subject to the policies of the rideshare companies.
So, as you can see, there’s a gap where you wouldn’t be covered. If an accident occurs during Period 1, you may be stuck paying 100% of the damage. But that’s not the only reason you should consider rideshare insurance.
Without rideshare insurance, you run the risk of your insurer dropping your personal auto insurance coverage. The reason for this is that you must state that you use your car to make money, as it is not covered by traditional car insurance. After you are dropped off, your premium will increase significantly since you are now considered high risk.
Another possible obstacle is that not all states offer rideshare insurance yet. Prices also vary from state to state and company to company, so be sure to get about three rideshare insurance quotes to ensure the best deal for your needs.
The good news, however, is that there are many options to ensure you’re well covered. You need a policy in some form as you are technically using your vehicle for commercial use since you make money driving. So that said, if your state doesn’t offer rideshare insurance or if it’s a better fit, you can opt for commercial auto insurance.
There is also an option to purchase Period 1 coverage to close the insurance gap you may already have directly with Uber or Lyft. Some insurance companies even offer an agreement where they won’t drop you as long as you disclose you’re a driver. The only catch is that they don’t cover you while your app is online, so experts recommend using this option only if you don’t move much while waiting for requests and if you have insurance from the rideshare company. Also, make sure to check with your insurance company if this is the case to avoid a situation where they would drop you at all costs.
In the end, it comes down to a few things, including your state’s law. Since states have laws on personal auto insurance, many also add laws regarding rideshare insurance and the minimum coverage you need. This should be a major motivating factor. In addition, you should consider how you plan to handle an accident of any magnitude during period 1 of a driving session. As mentioned earlier, it can easily destroy your bank account without careful consideration.
Therefore, as a rideshare driver or if you are planning to become one, getting rideshare insurance is critical. Even though your premium may increase slightly, it is affordable, especially when compared to having to pay all the damages from an accident. In addition, many insurance companies allow you to supplement an existing car insurance policy instead of issuing a completely new one, which is very beneficial for you as a customer. So, overall, it is not only vital but also worth having rideshare insurance.