Companies like Uber and Lyft appeal to people looking to make some extra money. Drivers use their own car and can choose when they want to pick up passengers.
But some people considering driving for extra cash might be worried about the toll it could take on their car, or the risk of getting into a costly accident. Posts online claim rideshare drivers need additional insurance policies in order to be fully protected since personal cars are being used to drive other people, not authorized work vehicles.
One post says “an Uber or Lyft driver’s personal insurance policy won’t cover a rideshare accident.” A VERIFY reader reached out to ask whether personal auto insurance coverage is enough if you’re driving for rideshare companies.
THE QUESTION
Does personal car insurance fully cover rideshare driving?
THE SOURCES
THE ANSWER
No, personal car insurance doesn’t fully cover rideshare driving.
WHAT WE FOUND
Rideshare drivers are not fully covered in the event of an accident if they are relying only on personal car insurance and built-in policies automatically provided by Uber or Lyft.
Gaps in these policies could leave drivers on the hook financially if they get into an accident while driving with the app open, but not actively transporting passengers, according to multiple insurance companies. Many insurance companies sell rideshare-specific plans that cover this in-between time and expand a driver’s benefits while working.
Rideshare companies like Uber or Lyft, require their drivers to have valid auto insurance as legally required in the drivers’ state, though neither company requires insurance that specifically covers ridesharing.
But a standard personal auto plan might not help drivers much in the event of an accident on the job. Rideshare driving is excluded from most personal insurance plans, so drivers likely won’t be covered by a personal insurance policy if they get in an accident while actively driving for a rideshare company.
Not notifying an insurer that a car is being used for rideshare driving may even lead to additional insurance problems.
“Engaging in ridesharing activities opens you up to potential liabilities that your personal auto policy may not cover, so an insurer could cancel or non-renew your policy if they find out you’re driving for a rideshare service and didn’t notify them,” Progressive says.
Uber and Lyft provide their own insurance, which covers some potential incidents while a driver is in the middle of a ride.
If a rideshare driver gets into an accident while transporting a passenger, Uber says its insurance covers “at least $1,000,000 for property damage and injuries to riders and third parties involved in an accident where you’re at fault.” Lyft’s insurance covers at least $1,000,000 for third-party auto liability and “first party coverages, which may include uninsured motorist coverage, underinsured motorist coverage, PIP, MedPay, and/or Occupational Accident coverage.”
In addition, if a driver has their own rideshare insurance, their comprehensive and collision coverage will also apply, according to Progressive.
Rideshare insurance add-ons typically provide additional protection for drivers if they get in an accident during the gap time after opening the app but before accepting a ride, which is not covered by regular insurance or the coverage provided by rideshare companies. Without this added protection, drivers could be responsible for paying out of pocket for costs if an accident happens.
Rideshare add-on policies do cost extra money. Progressive, which requires its customers who drive for a rideshare company to have rideshare insurance, says “this increase depends on a variety of factors, including the type of vehicle, location and the terms of a driver’s existing policy.”
State Farm, Allstate, Progressive, Geico and Farmers all offer their own forms of rideshare insurance. USAA also offers rideshare insurance, but it’s not available in all states.
Here’s a general timeline of how and when you’re covered:
If the app is off
If you are not actively using a rideshare app when you get into an accident, your personal insurance applies for coverage.
If you’re logged onto a ridesharing app but haven’t accepted a trip yet
If you have marked yourself available for a new trip on a ridesharing app, without rideshare insurance, your personal coverage is limited.
Both Uber and Lyft provide third-party liability insurance for injury and property damage during this period. But if you don’t have a valid rideshare insurance add-on and you get into an accident, there is a gap in personal injury and personal property damage coverage. Neither Uber nor Lyft include coverage for personal injury or medical payments before a ride is accepted.
If you’re actively on a trip
Once you accept and begin a trip, Uber or Lyft insurance provides coverage. If you get into an accident while on a trip with passengers, Uber’s insurance policy says property damage and injuries for riders and other third-parties are covered. Lyft’s insurance covers a higher amount of third-party auto liability when on a ride than if you were just logged on the app.
If you have rideshare insurance that already includes comprehensive and collision coverage, Uber and Lyft both say their insurance will also cover repair costs for the car. Progressive notes that comprehensive and collision coverage only applies at this stage if you have rideshare insurance. Personal injury coverage also depends on the driver’s policy.
There are some other risks to not signing up for rideshare coverage
Some insurance companies can deny claims, “cancel your policy altogether, or refuse to renew it, if it were to learn that you’re using your personal vehicle for hire without disclosing this to them,” law firm Negretti & Associates says.
Coverage specifics can vary depending on a variety of factors, like the terms of your personal insurance or what state you’re in. To learn more about Uber’s insurance policy, read here. To learn more about Lyft’s insurance policy, read here.
For delivery services, some companies like DoorDash and Instacart provide insurance coverage to drivers that is similar to the in-house policies that Uber and Lyft have. Some insurance companies, including USAA and Geico, include delivery service for these companies under their rideshare add-on insurance, while other policies are unclear if rideshare insurance includes delivery.
Experts recommend reaching out to your insurance provider for more information on rideshare insurance, including whether it also includes working for food delivery services.