Though Uber and Lyft both offer the same basic alternative to traditional taxi service, there are a few differences between the two apps that set them apart from one another.
Which app is better for drivers, investors and customers? We put Uber and Lyft head-to-head to determine which ride-sharing app reigns supreme.
Lyft vs. Uber Overview
Uber was the first major peer-to-peer ridesharing app to gain mainstream popularity. It was originally founded as UberCab in 2009. Customers create an account through the app, link their credit cards and request rides to destinations near them. Local drivers accept the ride and receive 75% of the cost of the trip. The remainder goes to Uber.
Since its inception, the San Francisco-based company has grown exponentially and now offers bicycle sharing and even water taxi transportation services. Uber operates in 785 metropolitan areas worldwide and has over 100 million users around the globe.
Uber captures an estimated 67.3% of the income generated by the U.S. ridesharing market. As of 2018, Uber’s annual revenue is estimated to be $11.3 billion.
After much fanfare and speculation, the rideshare king recently announced an upcoming Uber IPO for investors. The decision comes just 2 weeks after rival ridesharing service Lyft made its debut on the market. Uber will soon begin trading on the New York Stock Exchange under the ticker “UBER,” and experts estimate that the company may be valued at up to $120 billion.
The second largest name in ridesharing, Lyft, operates using a similar model to Uber. Customers request rides, local drivers accept and Lyft takes 20% of the value of the ride.
Launched in 2012, Lyft captures about 30% of the market share and operates in over 300 U.S. cities. The Uber competitor provides over 1 million rides a day and averaged about $2.16 billion in revenue in 2018.
Lyft’s IPO was offered on March 28 and valued the company at $24.3 billion. Lyft was the first ride-sharing service to offer an IPO, and the app currently trades on the Nasdaq stock exchange under the ticket “LYFT.”
Getting a Ride With Lyft vs. Uber
Uber and Lyft both offer a simple app-based method to get a ride — you simply create an account, request a driver and wait to be picked up. Though both apps share the same basic mechanics, there are a few variations in price and customer support tools that differentiate Uber and Lyft.
Lyft vs. Uber: Prices
Both Uber and Lyft use an upfront pricing model, which allows you to see the total price of your ride before you agree to the charge. This is different than traditional taxi models, which calculate fares on the road depending on traffic and how long it takes the driver to reach the final destination.
Both Uber and Lyft apply a base fare and a fare per mile to every ride based on the city of origin and an estimation of how long the ride will take in current traffic. This equals out to about $2 per mile, and there’s little difference in price between both apps.
When demand for drivers is high and there aren’t enough drivers on the road to meet demand, both Uber and Lyft apply an additional surcharge. Uber refers to in-demand pricing as surge pricing and Lyft refers to it as prime time pricing.
Uber’s surge pricing applies an additional charge based on current demand while Lyft applies a proportionate percentage increase during prime time. Though rates are comparable between both in-demand pricing strategies, you’ll usually pay a bit less through Lyft during busy periods.
Lyft vs. Uber: Safety
Naturally, safety is a major concern for ride-sharing patrons.
Since mid-2017, Uber has cracked down on its safety features after a class action lawsuit was filed by female riders claiming they had been sexually assaulted or harassed by their Uber drivers. Uber drivers must now pass a criminal background check before they are cleared to drive.
Uber is partnered with background screening service Checkr, and alerts the ride-sharing service if a driver is charged with a new offense after he or she begins a contract with Uber. Uber also offers a number of in-ride safety services and tools.
These include real-time identification verification, where drivers must periodically take a photo of their face and submit it to Uber to prove only registered drivers give rides, emergency trip notifications and two-way ridesharing (which allows select parties to track the ride via GPS).
Lyft was the first ride-sharing app to require its drivers to pass criminal and DMV background checks but it hasn’t expanded its safety offerings to meet Uber’s standards. Instead, the app relies on rider complaints and low ratings to weed out bad drivers — it’s a nice feature, but borderline useless in preventing emergencies.
Lyft vs. Uber: Customer Service
Uber currently holds a 4.7-star rating on the Apple app store. Though reviews are mostly positive, complaints about customer service abound. A large number of users complain that Uber’s customer service email and in-app support returns only canned responses that are easily found on the company’s website and do little to answer specific questions.
Lyft currently holds a 4.9-star rating on the Apple app store, and attitudes towards customer service representatives seem to be more positive. Though riders complain that chat support sometimes delivers generic information, users also consistently praise customer service representatives’ enthusiasm and friendliness.
Both companies offer critical response lines for addressing accident concerns, driver misconduct, etc. However, this support is only accessible for emergency situations and generic questions will be redirected to standard support on both platforms.
Driving for Lyft vs. Uber
Driving for Uber or Lyft can be a flexible and profitable way to earn some cash on your schedule. Ridesharing can be a great college job because both apps allow you to log in and work whenever you have spare time after school or on the weekends. But which app is better for drivers? Before you sign up, consider vehicle requirements and average driver income.
Uber Car Requirements
To qualify to drive for Uber, your car must:
- Have four doors.
- Pass inspection and have state-mandated insurance.
- Be able to transport a minimum of four passengers.
- Be fifteen years old or newer.
Your car must not:
- Have any kind of cosmetic damage or missing pieces.
- Be a branded taxi or commercial vehicle.
- Have a salvaged, reconstructed or refurbished title.
- Be a rental vehicle (except if approved by Uber).
You don’t need your name to be on your vehicle’s title as long as you’re listed as an insured driver on that vehicle's insurance policy. You must also pass a criminal background check and a DMV driving record screening before you’re approved to begin accepting rides.
Lyft Car Requirements
To qualify to drive for Lyft, your car must:
- Meet your city’s vehicle age limitations. Vehicle age requirements vary by city and state. To find out your area’s vehicle age limit, visit Lyft’s driver application.
- Have at least four doors, not including hatchbacks.
- Offer between five and eight seats, including the driver’s.
- Have five seat belts, including the driver’s.
- Have valid registration and insurance coverage.
Your vehicle must not:
- Be a limousine, branded taxi, or subcompact vehicle.
There are also a few driver requirements you must meet to qualify to drive. You must:
- Be 21 years old or older.
- Have at least one year of licensed driving experience in the following states: California, Hawaii, Illinois, Massachusetts, Minnesota, Oregon, Pennsylvania, Vermont or Washington.
- Pass a DMV driving check that indicates you have 3 or fewer minor moving driving offenses (speeding, minor accidents, etc.) and no major moving vehicle violations (driving on a suspended license, reckless driving, etc.) in the last 3 years. You must also not have been convicted of any moving drug or alcohol related offense (like a DUI) or driving-related felony (like a hit-and-run or vehicular manslaughter) in the past 7 years.
- Pass a criminal background check that’s clear of any disqualifying violent crimes (like sexual assault, battery, or certain drug offenses).
Lyft vs. Uber: Driver Income
According to Ridester’s 2018 driver survey, drivers earn virtually the same amount of money whether they drive for Uber or Lyft. Uber takes 25% of a ride’s value, while Lyft only takes 20%.
This means that on an individual ride basis, a driver working with Lyft will make more money than a driver working with Uber who drives the same route at the same time. However, Uber also has a larger market share than Lyft, which means that more drivers use Uber and there’s more opportunity to make money.
Rideshare Insurance
Both Uber and Lyft classify their drivers as independent contractors, not employees. This means that if you’re involved in an accident while driving for Uber or Lyft, the company isn’t legally obligated to cover the costs of the accident.
You may also find that your auto insurance policy includes an exception that can deny you coverage if you use the vehicle for commercial purposes. This can leave you personally responsible for auto repair, medical or legal bills incurred after a collision while you’re transporting a passenger.
Rideshare insurance can fill in the gaps left by your insurance policy. Rideshare insurance is available in most states and through many major insurance providers. We’ve rounded up some of our favorite rideshare insurance providers:
Farmers
Farmers Insurance offers rideshare add-on packages designed to “fill in the gaps” in your current Farmers policy.
Farmers rideshare insurance coverage begins the moment you log onto Uber or Lyft to pick up your first ride and lasts until you log off for the night and revert back to personal vehicle coverage.
Farmers Insurance includes coverage for collisions and medical expenses, and you can customize your policy to suit your needs.
Its website includes an easy-to-understand yet comprehensive explainer on how rideshare insurance works.
You can even score a discount through bundling if you already have home, life or recreational insurance through Farmers.
- Rideshare drivers
State Farm
Like Farmers Insurance, State Farm offers optional add-on rideshare coverage to keep you protected.
State Farm Rideshare Driver Coverage extends all of your personal auto insurance coverage when you’re matched with a rider or transporting them to their destination.
It may include everything from uninsured motorist coverage to rental reimbursement, depending on how much coverage you’ve purchased through your personal policy.
Best of all, rideshare insurance from State Farm is affordable, adding just 15% to 20% of your premium to your standard auto policy — a bargain if you drive for Uber or Lyft full time.
Riding Safely Into the Future
It’s difficult to say whether Uber or Lyft is “better” because the differences between the apps often come down to personal preference, where you live and the safety features you value. The best way to determine which ridesharing app is best for your needs and taste is to do a “test run” with both apps to see firsthand which service you prefer.
Related content:
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.