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Insurance Requirements for Rideshare Drivers

ride share

Ridesharing (like Uber and Lyft) is the number 1 way to “catch a ride”. Yet, since this was a brand new way to think about transportation, there was no historical precedent for this in auto insurance. So, this posed a problem. It became the forefront for Uber when the company and a driver was sued for manslaughter after a tragic accident.  

Does car insurance cover a rideshare business?

Most major auto insurance companies will not let you use your personal car for business purposes (like delivery or rideshare).  Auto insurance policies contain a clause that excludes coverage for commercial activities like pizza delivery, newspaper delivery, and transporting people for profit. If you engage in these activities and file a claim, it will most likely be denied.  

Under the "Exclusions" section of your policy, you may find a statement like this: "Coverage under this Part I, including our duty to defend, will not apply to any insured person for bodily injury or property damage arising out of the ownership, maintenance, or use of any vehicle or trailer while being used to carry persons or property for compensation or a fee." 

Will Uber/Lyft cover me if I’m in an accident?

If you're considering bypassing the notification process with your insurance company and going straight to Uber, think again. Uber's coverage is contingent, meaning you must file a claim with your own insurance company first, and then Uber will step in to cover what they are responsible for.  

Here are some examples of how Uber and your car insurance may work in the event of an accident:

Phase 1 – App On: Imagine you, as a driver, are in Fort Walton Beach, waiting for a ride request, and unfortunately, you get into an accident. In this phase, Uber will cover the other party's injuries up to $50,000 per person, $100,000 per accident, and only $25,000 for property damage. However, if you sustain injuries or your vehicle is damaged, Uber will not provide coverage, leaving you personally responsible. 

Phase 2 & 3 – Request Accepted / Rider in Car: Now, let's say you've accepted a ride request and have a passenger in your car. While on your way to pick up the passenger in Destin, you rear-end the vehicle in front of you on the Mid Bay Bridge, near Niceville. During this phase, Uber will cover up to $1,000,000 for injuries sustained by the other party, including Uber riders, as well as any damage to other vehicles involved. Additionally, if you have comprehensive and collision coverage on your own policy, Uber will cover your vehicle's damage with a $1,000 deductible. Unfortunately, you cannot use your own policy's $250 deductible, as your claim will be denied. 

Identifying Gaps in Your Coverage

Apart from your personal auto insurance policy denying coverage that Uber won't pay for, there are other potential gaps to consider: 

  • Medical Coverage: Uber does not provide coverage for your medical expenses. Since your own auto policy will deny the claim, you'll be personally responsible for these costs. 
  • Lawsuits: Even if Uber covers a portion of the damages, you may still be named in a lawsuit. Our society is litigious, and when people perceive an opportunity to obtain compensation, they tend to pursue it. Once the injured party discovers that you're a rideshare driver for Uber, they might see a potential source of financial gain through the company. 
  • Rental Car: If your car is involved in an accident and requires repairs that will take weeks, you'll be left without a vehicle. This situation can significantly impact your ability to work, take your children to school, or run everyday errands. 

How to be Fully Covered while Driving a Rideshare?

In Florida, there are a few insurance companies that offer Ridesharing endorsements, which you must add to your policy, as it's not automatically included. Before becoming a rideshare driver, it's essential to contact your insurance agent to determine if your current insurance company provides this endorsement. If they don't, inquire about their recommendations for alternative coverage options. 

If you are a rideshare driver who isn’t fully insured, or you are thinking of starting to drive for Uber or Lyft (or any other rideshare company), talk to your car insurance company or agent to be fully covered BEFORE you start driving.