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Every driver knows that insurance is required by law when they’re on the road, but when you’re driving for a rideshare app, you may be legally safe without being adequately protected — even if you think you are. When you get into a Lyft or Uber accident, a rideshare insurance policy can save your wallet by giving you the coverage you need.
If you dive into the terms of your personal auto policy, you’ll most likely find that your insurance doesn’t apply at all for commercial use. At the same time, Uber and Lyft aren’t providing you with full coverage through their complementary policies the whole time you drive. When you’re earning money through ridesharing, any bad car crash can lead to massive debt on top of injuries.
We’ll walk you through where Uber and Lyft are leaving you vulnerable, as well as the different types of rideshare insurance you can choose from.
The rideshare coverage gap occurs when you’re logged online and waiting for requests. During this time, your personal auto insurance does not apply, while your free Uber insurance or Lyft insurance policy will offer very little coverage.
If you get into an accident where you’re at fault within this coverage gap, Lyft and Uber will both only provide $50,000 per person, $100,000 per accident, and $25,000 for property damage. This will already prove to be less than ideal when the other party’s medical expenses add up or their vehicle is determined to be a total loss. To make matters worse, neither rideshare company offers any form of coverage for your own bodily injuries or car damage when you’re between trips.
This low coverage is a far cry away from Uber and Lyft’s excellent coverage when you’re actively working on a ride request. From the time you accept a trip to the time you complete a drop-off, Lyft and Uber car insurance both offer $1 million in liability coverage, full comprehensive and collision coverage, and great uninsured/underinsured motorist coverage. This illustrates the huge coverage gap that you’re left with when you’re idling between trips.
But even when you’re en route to your pick-up or drop-off location, there is still a small gap that many rideshare drivers are unaware of. To get your collision and comprehensive coverage, you must first pay a high deductible of $1,000 (for Uber) or $2,500 (for Lyft).
Rideshare insurance can help with both of these gaps.
Rideshare insurance is protection you need to ensure that you’re fully covered during the coverage gap. Where your personal auto insurance policy doesn’t apply and your ridesharing company’s policy doesn’t offer much help either, this insurance option will fill in the holes. This way, you won’t be left paying thousands of dollars after a car crash.
At the very least, rideshare insurance coverage will boost your coverage during the waiting period. At the max, it can fully replace your personal policy with a plan that’s perfect for both rideshare and personal use.
One of the best things about rideshare insurance is the fact that it can cost you as little as $10 per month — and that expense is often tax deductible. While greater ridesharing coverage will, of course, cost more, getting the basics of what you need is affordable enough that all Uber and Lyft drivers should be adding this type of insurance to their shopping lists.
Selecting the right type of rideshare insurance for your needs can be a hard choice. Not only do you have to think about how much protection you personally would feel most comfortable with, but you also have to consider what insurance company you’re currently working with and whether or not you’re willing to switch.
Below, we’ll explain the three main types of rideshare insurance policies, so you can wisely take your pick.
If you’re looking for a cheap, no-frills coverage option, gap insurance may be a great fit. This is a type of add-on policy that simply ups your protection during the coverage gap, giving you exactly what you need. Gap insurance sometimes takes the form of a simple “rideshare endorsement” that’s added to your personal insurance policy to show that you have extra coverage.
Gap insurance doesn’t always just cover the waiting period. In some cases, if you get into a crash during an active trip, it can also lessen the deductibles that you owe before you get covered for your injuries and car damages.
Popular car insurance companies that offer gap insurance include Travelers Insurance, Allstate, Metlife, and Progressive.
Link to newest “gap insurance” post when published.
Another form of rideshare insurance simply extends your personal policy into your commercial use. Instead of buying a separate add-on, Lyft and Uber drivers can simply pay extra on their personal plans to get the same coverage while they’re earning on the road.
Of course, this extended coverage option is only available to you if your current provider offers it. Safeco, State Farm, Erie, Mercury, and USAA are all trusted companies that offer this type of rideshare insurance. You’ll need to reach out to your provider to get an exact insurance quote, since your final price will depend on what’s included in your current coverage.
Looking for a more comprehensive option than both gap insurance and extended coverage, without buying commercial insurance? You may want a brand new policy that replaces your current one altogether.
As the gig economy grows, more insurance companies are offering plans that are specifically built for rideshare drivers and their lifestyles. This hybrid personal and rideshare insurance covers virtually all your driving activities, whether you’re waiting for requests, en route to a pick-up location, or logged off your app and simply heading to the grocery store.
Again, this type of plan will completely replace your personal policy, so there’s no need to worry about staying with your current provider if your heart is set on this type of insurance. Geico is the most popular coverage replacement provider, though companies like Allstate and Progressive do offer this type of rideshare insurance, too.
Written by Brett Helling