Is There Coverage for Ridesharing Under Your Auto Policy?
According to some numbers, as many as one-third of Americans use ridesharing services, also known as ride-hailing. Crunching the numbers, Uber has a global market value of more than $70 billion, with Lyft coming in at $24 billion.
When it comes down to you as an individual, though, are you protected as a rideshare or delivery gig driver? What about as a passenger? In this article, I’ll provide clear-cut answers to these common questions so you can make a more informed decision.
Let’s start by quickly discussing a few basics, and ensuring we’re all on the same page.
What are Ridesharing and Contract Delivery Gigs?
Most of us nowadays are familiar with ridesharing services like Uber and Lyft. After entering your address in their respective apps, you can request that a driver pick you up and take you to a predefined location, displaying the total price in advance.
Popular delivery services like Doordash, GrubHub, and Postmates (to name just a few) offer similar functionality. Instead of getting you from one place to another, though, these apps allow you to order food and have it delivered to your door—at a premium cost, of course.
With these details in mind, let’s break down the coverage provided under a personal lines auto insurance policy based on two circumstances: a passenger and a driver.
Does Your Auto Insurance Cover You as a Passenger in a Rideshare Vehicle?
If you’re involved in an accident while traveling as a passenger inside a ride-shared vehicle, the good news is that you could have more than one form of insurance in place.
The respective rideshare company’s (e.g., Uber, Lyft, etc.) insurance would initially provide coverage. We’ll briefly talk more about this in a moment. Still, the coverage afforded by these ‘catch-all’ policies is typically limited, and likely lower than what you’d ideally carry under your own policy.
If this option fails to pay for one reason or another, you may have coverage under the uninsured/underinsured motorist (UM/UIM) portion of your auto policy. You might find that it’s similarly limited in scope, though.
Comparatively, what happens if you’re behind the wheel of a rideshare or delivery vehicle when an accident occurs?
Does Your Auto Insurance Provide Coverage if You’re the Owner of a Vehicle Used for Ridesharing?
Compared to riding as a passenger, most personal lines (i.e., non-commercial) auto policies specifically exclude coverage for accidents that occur while a vehicle is used in the course of business. Furthermore, nearly all policies exclude livery or being ‘for-hire,’ which is a double-whammy if you drive for a rideshare or delivery app gig.
Together, if you’re involved in an at-fault accident when you’re actively driving as a rideshare or delivery worker, your auto policy won’t provide coverage. And you could end up paying a hefty sum for damages and medical expenses out of your pocket.
The issue is further compounded by the fact that according to NOLO.com’s Janet Portman, unlike traditional taxis:
“Uber and Lyft don’t own or operate cars, and go to great lengths to not treat drivers as employees; they prefer to treat them as independent contractors. This classification is critical to the companies’ avoiding responsibility for accidents or damage that happen when drivers are working: Independent contractors are normally responsible for the results of their own negligence, whereas an employer usually covers the consequences of an employee’s carelessness. (Learn more about employer liability for car accidents.)”
Until relatively recently, this gap in coverage placed gig drivers in the tough position of choosing between earning money and sitting on the sidelines in fear of getting into a wreck while working.
Do Rideshare Companies Provide Insurance Coverage for Their Drivers?
The short answer is: yes.
However, it’s important to emphasize that the per person/per accident liability limits are typically at the lower end of the spectrum, depending on your assets and other crucial factors.
Also, coverage provided by these companies is strictly limited to whether or not you were logged into the app at the time of the incident, accepted a request, or were in the process of completing a request.
Finally, like any other insurance, the coverage provided by these companies is subject to a deductible. Therefore, even if you were fully covered, you might have to cough up $2,500+ to meet your deductible.
Can You Add a Ridesharing Endorsement to Your Personal Lines Auto Policy?
Fortunately, several personal lines insurance companies offer ridesharing and related endorsements that will increase your premium. Still, they also amend your policy language so that these business-related activities are no longer excluded. In many instances, these changes will provide more robust coverage than what’s provided directly by the gig companies.
From a cost perspective, some auto insurance carriers look to acquire more business from gig drivers than others and price their ridesharing coverage accordingly.
For example, Allstate reports their rideshare insurance is only about $20 per year, whereas Erie’s can cost as much as $15 per month, and State Farm’s is priced at 15%-20% of the total premium. If you’re in the military and also a rideshare driver, USAA’s insurance rates fall somewhere in the middle and start at about $6 per month.
Do You Have Additional Questions About Auto Insurance for Rideshare or Delivery Gigs?
If you’re a rideshare or delivery gig driver, it’s sometimes difficult to uncover easy answers when it comes to auto insurance. Fortunately, the team at IHS Insurance Group has decades of combined experience helping customers like you quickly and simply find the auto coverage they need, at prices that fall well within their budget.
Need a FREE Quote? Or do you have questions about if you need additional insurance, or if your current policy covers ridesharing or contract deliveries? We have three convenient ways to reach us:
- If you prefer to talk to a licensed agent directly, please call (866) 480 5063.
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We look forward to speaking with you today!