Rideshare insurance is designed to prevent coverage gaps for any full or part-time gig workers employed by companies like Uber or Lyft. Also known as a rideshare endorsement, it’s either an insurance policy add-on or its own standalone product designed for employees of transportation network companies.
How does rideshare insurance work?
Let’s say you make money driving for Lyft, and you do so using the same personal car that you use to drive to the grocery store and visit your mom. When you’re on the clock, it means your car is suddenly being used for commercial purposes. A typical insurance company’s personal auto policy isn’t sufficient coverage here.
However, commercial insurance is more expensive than a personal auto policy… it’s actually so much more expensive that some Uber or Lyft drivers might actually feel like they can’t afford it, and still manage to turn a profit.
Uber, Lyft, and other ridesharing companies offer a certain amount of coverage to their drivers while a passenger is actively being driven around. But this doesn’t provide the same kind of coverage for when there’s no passenger in the car—like if you’re cruising around between fares. In addition, this extra coverage from rideshare companies can come with a steep deductible, around $2,500 or more.
So what are some other options?
Rideshare insurance (or a rideshare endorsement) is designed by insurers to step in and cover you, and your car, while you are working, but not actively driving a passenger. This can also help make the cost of the deductible on your rideshare company policy more affordable. Any car accidents that happen while you’re “off the clock” will be covered by your personal auto insurance.
Let’s look at some scenarios and how this would play out.
- You’re driving to the grocery store to pick up some snacks. Your rideshare app is off, and you are not working. Your personal insurance provider would cover you if you got into an accident or fender bender en route (up to your policy and liability limits).
- You leave your driveway, ready for a shift as a rideshare driver. From the moment you turn your app on, your personal car insurance no longer covers you—but your rideshare insurance policy kicks in, and the policy covers accidents when there’s no one else in the vehicle.
- Your app dings and you get a ride request. Once you accept, your insurance through the rideshare provider (like Uber or Lyft) is now in effect—even while you’re driving to pick up the fare at their location. (In short: If your rideshare app is on, you’re considered to be “working.”)
- You’ve picked up your passengers, and are on your way to their destination. Your coverage from Uber, Lyft or any other rideshare provider that offers the coverage is in full effect.
Does rideshare insurance cost more?
Being a rideshare driver means you are on the road more often, often during high traffic times. That puts you at inherently more risk, meaning your car insurance will be more expensive.
However, the way that rideshare insurance is designed is that it creates a cushion to cover you during the times you are not covered. Because of that, it’s significantly less expensive than commercial insurance. Contact your insurance agent to discuss your insurance coverage, whether they offer it and to get an insurance quote.
What happens if I drive for Lyft or Uber without the proper coverage from my insurance company?
Not having the proper coverage while driving a car can be financially risky. While you might think that you are covered through the combo of your personal car insurance and the rideshare company’s coverage, it’s providing a false sense of security. Namely, you’re essentially driving without coverage during those times when you’re “on call” but not actively picking up or transporting a passenger.
What if you skip a rideshare endorsement and don’t bother to purchase insurance offered by your rideshare employer? Well, if your car is involved in an accident, your insurance company can and will deny a claim made on your personal car insurance policy if any evidence of operating as a rideshare driver is found. That means you’d be on the hook for medical expenses for you, your passengers, and anyone else injured by your car.
Does Lemonade Car offer rideshare insurance coverage?
Not yet. A Lemonade Car policy can’t cover people using their cars for business, which includes driving for Lyft, Uber, and other rideshare companies, but we’re always working to improve our insurance coverage, so it’s worth checking back in to see if this changes.
Insurance companies are not required to offer rideshare coverage, and many don’t. In fact, like Lemonade, they may expressly exclude rideshare and business use. Be sure that you clearly indicate on your application, or to your insurance agent, if you will be using your car for rideshare purposes. They will advise you if coverage is available.
Some insurance companies may offer rideshare coverage, but limit it to certain scenarios, coverage limits, and states. If a rideshare policy isn’t available, a commercial policy might be necessary.
Keep in mind, you’ll have to ask your current insurance company to see if they offer rideshare insurance—either in the form of an endorsement on your personal auto policy, or as a new standalone policy. In the event that your insurance company doesn’t offer coverage for rideshare, you should seek look for alternate careers.
Do food delivery drivers need rideshare insurance?
Well, it’s complicated—and honestly, it depends on your insurance company.
There are three main types of coverage for people who use their car for business, like Uber Eats drivers: a “for business use” classification; commercial insurance; and rideshare insurance. Your insurance company may require you to have one of these coverages, or they may cover your driving without it. Ask your insurance company or agent about what makes the most legal sense in your specific case, and be open about your situation to prevent claims being denied in the future.
A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage and discounts may not be available in all states.
