Best Rideshare Insurance

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Contributor, Benzinga
January 2, 2024

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As a driver, you already know that you need auto insurance to safely and legally operate on the road. Unfortunately, you might not know that your personal auto insurance policy might not protect you while driving for a company like Uber or Lyft. Our guide will help you understand rideshare insurance and how it can help keep you protected while you work.  

Quick Look: The Best Rideshare Insurance

  • Best for Rideshare Drivers: State Farm
  • Best for Pay-Per-Mile Insurance From an Established Company: Allstate
  • Best for Active Military Members: USAA

The Best Rideshare Insurance

Best Rideshare Drivers: State Farm

If you aren’t interested in buying an entirely new car insurance policy, you might want to consider a policy extension.

Policy extensions or endorsements fill in gaps between your personal car insurance policy and the policies you get from your ridesharing company.

State Farm offers add-on extensions for Uber or Lyft drivers with no mileage limits. You also won’t need to pay extra if you drive for a food delivery app (like Uber Eats) as well as a ridesharing app.

This provides you with an affordable way to further protect yourself while using a ridesharing app.  

Pros

  • This firm is well established and offers policies that serve gig workers
  • You can get the right extension for the company you work for
  • You can easily adjust your policy to save money

Cons

  • State Farm does have a history of denying claims quite publicly

Best for Pay-Per-Mile Insurance From an Established Company: Allstate

Ridesharing insurance isn’t available in every state.

However, Allstate extends its policies to most parts of the country.

Though you’ll already need to be an Allstate customer in order to add the company’s “Ride For Hire” coverage to your policy, this can be an excellent option for those who live in areas with limited ridesharing insurance availability. 

Pros

  • You can get coverage in any state, and even cover neighboring states that you tend to drive to
  • This firm has lots of captive agents near you
  • You can manage your whole policy online if you like

Cons

  • Allstate’s prices may be higher than you expected

Best for Active Military Members: USAA

In addition to homeowner’s insurance and car insurance policies, USAA also offers discounted ridesharing insurance coverage to members of the armed forces, veterans and their families.

USAA is known for providing exceptionally affordable car insurance options as well as guaranteed repairs at more than 2,900 USAA-approved locations.

If you’ve served in the military, USAA can offer a cost-effective way to further protect your ridesharing activities. 

Pros

  • You can get lower rates in many cases if you’re a military member or family
  • The platform offers quality customer care
  • You can visit locations that offer direct customer service without passing you off to a vendor

Cons

  • The hierarchy of handing down coverage could easily exclude families of military members who didn’t choose USAA many decades ago

What is Rideshare Insurance?

Ridesharing insurance is a coverage that you purchase from the company that provides your personal auto insurance policy. Because you’re letting your insurance provider know that you’ll be using your vehicle for work-related purposes, the insurance company can adjust your policy to accommodate you while you provide rides and wait for requests.

Rideshare insurance is typically a car insurance extension that you add onto your personal auto insurance coverage. Your ridesharing insurance fills in the gaps left by these ridesharing companies to extend your personal collision, comprehensive and other coverages to instances when you’re using the app and your personal auto insurance policy doesn’t apply.

Working for a rideshare company is considered a commercial use of your vehicle. This means that your personal policy might not protect you while you’re waiting for riders or when you’re transporting guests to their location. 

Though Uber and Lyft may provide you with limited liability insurance while you’re using the app or waiting for passengers, this coverage won’t extend to damage to yourself or your vehicle.

Ridesharing insurance extends the coverages and deductibles found on your personal auto insurance policy to instances when you’re working for a company like Uber or Lyft. 

Now that you know the answer, are you ready to find your policy? Check out the providers below to see what type of coverage they can offer you and compare quotes.

How Does Rideshare Insurance Work?

Uber and Lyft are both classified as Transportation Network Companies (TNCs), and they provide limited liability protections to drivers. TNCs provide you with varying insurance coverage depending on what “period” you’re in. The periods these companies use and the protections you’ll gain through your ridesharing company are as follows.

  • Your app is off: When you aren’t signed into your ridesharing app and waiting for work or transporting a passenger, your ridesharing company will provide you with no protection. Your personal auto insurance policy will be responsible for handling all claims made when you aren’t working.
  • Your app is on and you are waiting for a ride request: While waiting for a ride request, your TNC will provide you with $50,000 worth of bodily injury liability coverage per persona, $100,000 worth of bodily injury liability coverage per accident and $25,000 of liability coverage for property damage. These protections only apply if your personal auto insurance policy doesn’t cover you during this period. Note that during this period, you have no collision insurance or insurance for damage to your own vehicle or health.
  • You are picking up or transporting passengers: While fulfilling a ride request, your TNC will provide you with $1 million in third-party liability coverage, uninsured and underinsured motorist coverage (depending on your state’s requirements) and contingent collision and comprehensive coverage. Both Lyft and Uber implement a $2,500 deductible on collision and comprehensive coverage and insure you up to the cash value of your vehicle. 

As you can see, there are multiple areas where you might be left without coverage should you only rely on your personal auto insurance policy.

If you have collision or comprehensive coverage on your personal auto insurance policy, it won’t apply when you’re using your app for work. This can leave you completely unprotected while waiting for a ride request.

Types of Rideshare Insurance

There are multiple types of ridesharing insurance policies, and the options that you’ll have available to you may vary depending on the insurance company that you’re working with and the state that you live in. Let’s take a look at a few of the most common coverage options you’ll find. 

Hybrid Insurance Policies

The simplest way to get rideshare insurance is to purchase a hybrid insurance policy. Hybrid insurance policies cover you with the same list of protections no matter if you’re driving your vehicle on your own time or for work. These policies also come with a single monthly premium, which makes covering all of your expenses easier to understand.  

Ridesharing Extensions or Endorsements

Ridesharing endorsements or extensions are add-on options intended to fill in the gaps left by Uber and Lyft’s coverage while using the app.

Unlike hybrid insurance policies, these extensions don’t replace your personal auto insurance coverage — they only add protections based on the specific limitations of each app’s insurance provisions.

Though ridesharing extensions don’t offer the same all-in-one coverage that you’ll find through a hybrid insurance policy, they’re usually the most affordable way to protect yourself when you’re driving for a TNC. 

Commercial Auto Insurance

Ridesharing insurance isn’t available in every state. If you live in a state where you cannot purchase a hybrid insurance policy or a policy extension, you might need to invest in a commercial auto insurance policy. 

Commercial auto insurance policies are more expensive than coverage specifically for drivers using a ridesharing app, they can help you handle a wide range of accidents and incidents where you might need to file a claim.

Without a commercial auto insurance policy, you will be financially responsible for any damage to your vehicle that isn’t covered by your TNC’s policies. 

Average Cost of Rideshare Insurance

Adding ridesharing insurance to your list of coverages is usually not very expensive. You can expect to pay a few additional dollars each month to extend your coverage to your ridesharing activities.

Major insurance provider State Farm claims that drivers can expect to pay about 15% to 20% more for their auto insurance to extend coverage to ridesharing activities. This means that if you pay $100 a month for your car insurance, you can usually expect to pay between $115 and $120 per month with the addition of ridesharing coverage. 

Find Ridesharing Insurance 

If you plan on driving for Uber, Lyft or another ridesharing service, it’s in your best interest to protect yourself with a ridesharing insurance policy. If you drive without a policy extension, you should expect to be held liable for any damage to your vehicle that occurs while you’re working.

Taking a few hours to compare endorsements and hybrid insurance policies can potentially save you thousands of dollars if you find yourself involved in an accident while working.  

Frequently Asked Questions

Q

Do you need rideshare insurance?

A

If you drive for a ridesharing company, you should add some type of ridesharing insurance to your policy. Though there is no law that says you must have ridesharing insurance, this protection can help save you from thousands of dollars worth of collision bills if you’re involved in an accident while working.   

Q

Do I have to tell my insurance company I drive for an app like Uber or Lyft?

A

Yes. If you fail to disclose this information, your personal auto insurance provider can deny you coverage for any claims made while you are using your ridesharing app for work.   

Q

Does your rideshare company insure you?

A

You should read your onboarding information carefully as rideshare companies often carry massive amounts of liability insurance for you, but they do not insure your vehicle. This, you must do on your own.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.