Everything You Want to Know About Ridesharing Insurance coverage

There’s no question about it: Almost all drivers need car insurance. This becomes even more important if your car is a source of income, as it is for ridesharing drivers. Unfortunately, because services like Lyft and Uber are so new, driver insurance policies—and the laws applying to them—are still being ironed out in many states.

Still want to be a rideshare driver? Here’s what you need to know to do it safely.

Is ridesharing legal?

That depends. Some areas, including Portland, Oregon, and Broward County, Florida, have issued challenges to ridesharing companies that prevent them from operating legally, though their drivers may still be on the road. Other spots—like California and San Antonio—regulate ridesharing, but allow it. Laws vary from state to state and city to city.

The easiest way to find out if ridesharing is legal where you live is to make a few phone calls. Start with your city government or police department. Current rideshare drivers in your city might be another good resource. Ridesharing companies’ websites don’t always reflect recent court decisions, so it’s best to do your own research.

What kind of insurance do you need?

Here’s the catch: Even if it’s legal for you to become a rideshare driver, your auto insurer doesn’t have to like it. At worst, your insurance company can cancel your personal policy if they find out you’re ridesharing, leaving you without coverage when you’re not driving for pay. And even if they don’t drop you, it’s very unlikely they’ll cover ridesharing damage. Raising the limits on your personal policy won’t help.

Though there are exceptions, most auto insurers are critics of ridesharing. For example, last month, the San Francisco Chronicle uncovered Geico training documents detailing some of the consequences for customers who drive for ridesharing companies—including non-renewal and referral to the fraud unit. Allstate and State Farm have also stated that their policies do not cover ridesharing. And the story’s the same at many smaller insurers, like Esurance.

Purchasing a commercial auto policy is the only way to be fully protected. These plans have higher liability limits than a typical plan, and may also cover rental reimbursement and other services. They’re also pricey. According to the insurance agent group Trusted Choice, the average commercial policy for a passenger car costs between $ 1,200 and $ 2,400 per year, and some drivers have been quoted much higher rates.

Are you covered by your ridesharing company?

Whether you drive for Lyft, Uber or Sidecar, your ridesharing company will provide some level of insurance protection, at least while you’re carrying passengers. How much?

Keep in mind that if you have an accident between Lyft or Uber rides, you’ll need to file a claim with your provider first—and have it denied—before the ridesharing company will step in. And ridesharing companies’ limits in these cases are relatively low. They’re unlikely to cover a serious accident.

If you have an accident during a ride, Uber and Lyft will cover it, even if an uninsured or underinsured driver is involved. Their $ 1 million policy is much more than most drivers, even taxi drivers in many major cities, carry in liability. You can also draw on their comprehensive and collision coverages, which are generous, provided you have them on your personal insurance. Beware, though: Deductibles are high, and the policies only apply during rides.

Sidecar doesn’t cover drivers for between-ride damages, and its collision policy—there is no comprehensive coverage—is contingent to your personal insurance. However, the company does have the lowest collision deductible of the bunch.

None of the companies will cover you if you’re not signed into the app, which means that you’ll still need a personal insurance policy, no matter what protections your ridesharing company offers.

What happens if you get in an accident?

Whether your accident results from ridesharing or not, your first step should be to call the police. Depending on your accident type and your ridesharing company’s rules, you might provide your personal proof of insurance or your company’s certificate. Exchange information with the other driver as you normally would.

Next, if you need to, file a claim with your personal insurer. Even if you can rely on your ridesharing company to cover your damages, your personal insurer will want to know about any accidents. This can put drivers who haven’t been honest about their status in a tough situation. If you choose not to tell your insurer, know that you risk being dropped if they find out. And even if they’re not covering the accident, notify your ridesharing company as well. If you can take advantage of their coverage, a rep can help you start the claims process.

The bottom line

There’s good news for current and prospective ridesharers concerned about insurance. Lyft and Metlife have partnered to create new products for the company’s drivers. As the industry continues to expand, options from other insurers and ridesharing companies can’t be far behind. Other companies are also seeing ridesharing as an opportunity. For example, Peers’ Keep Driving program allows rideshare drivers to lease a car in their own name if their vehicle is the shop.

It’s important for rideshare drivers to know how they are, and aren’t covered. But they have allies. Governments, insurance companies and ridesharing services are all combining forces to close the “insurance gap” and make sure that anyone can sign into Lyft, Uber or Sidecar worry-free.

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Image via iStock.

Everything You Want to Know About Ridesharing Insurance coverage  

Company	Policy With Passengers	Policy Without Passengers	Collision/Comprehensive?	C/C Deductible
Uber	$ 1 million per incident, $ 1 million UI/UM	50/100/25	$ 50K (only applies with passengers)	$ 1,000
Lyft	$ 1 million per incident, $ 1 million UI/UM	50/100/25	$ 50K (only applies with passengers)	$ 2,500
Sidecar	$ 1 million per incident	N/A	$ 50K (collision only, only applies with passengers)	$ 500