Rideshare insurance is a type of car insurance policy or an add-on that increases a driver’s coverage and lowers their deductible for accidents that occur when driving for Lyft, Uber, or similar companies. Without rideshare insurance, a driver’s personal car insurance will not apply when they are online with the app.
Uber and Lyft provide broad coverage when drivers are picking up and driving a passenger. But they only provide liability insurance for drivers waiting for a ride request, creating a coverage gap. Consequently, rideshare insurance coverage from a standard or commercial insurer is needed to supplement the insurance from Uber and Lyft.
Key Takeaways About Rideshare Insurance
- Uber and Lyft provide uneven insurance coverage for drivers.
- Additional rideshare insurance is not required, but it helps fill coverage gaps and lower a Lyft or Uber driver’s deductible.
- Rideshare insurance can be purchased as an add-on to a personal car insurance policy, as a commercial policy, or as a “hybrid” policy that covers personal and business use.
- A ridesharing endorsement on a personal car insurance policy costs around $6 - $27 per month, or 15% - 20% of a driver’s annual premium.
Do You Need Rideshare Insurance?
You need rideshare insurance from your personal car insurance company if you drive for Uber and Lyft and do not want to pay out of pocket for your own expenses if you are at-fault in an accident while waiting for a ride request. You should also buy rideshare insurance if you would prefer a deductible lower than $1,000.
Rideshare insurance is separate coverage from the insurance that Uber and Lyft provide for drivers. Uber and Lyft drivers have liability-only insurance while the app is on and they are waiting for a ride request. Drivers who get into an at-fault accident during this period will be financially responsible for their own injuries and damage to their vehicle, unless they have supplemental coverage.
Once Uber and Lyft drivers have received a ride request from a passenger, the company coverage increases and begins to include comprehensive and collision coverage. However, Uber’s $1,000 deductible and Lyft’s $2,500 deductible are particularly high compared to the average car insurance deductible on a personal policy.
Since most Uber and Lyft drivers rely on their car for their livelihood, it’s best to buy rideshare insurance to avoid ever driving with liability-only insurance. Some rideshare insurance policies will also provide comprehensive and collision coverage when drivers are picking up or driving a passenger, which means that drivers can avoid the elevated Lyft and Uber deductibles.
Types of Rideshare Insurance
Insurance companies sell different types of rideshare insurance, since it is a new and evolving kind of coverage. It’s important to know what type of policy you want, since they cover slightly different scenarios.
Hybrid Rideshare Insurance
Companies like Geico offer “hybrid” rideshare insurance, which combines personal and rideshare coverage into one policy with a single premium. Geico’s hybrid insurance covers drivers regardless of whether they are driving for business or pleasure. Drivers can select a deductible starting at $250.
Rideshare Insurance Endorsements or Extensions
The details of rideshare endorsements and extensions vary, but these policy add-ons are usually meant to cover the gaps in Uber’s or Lyft’s coverage. Unlike hybrid policies, endorsements can be added or removed from a standard car insurance policy.
For example, State Farm’s rideshare insurance is an endorsement that covers drivers who are online and waiting for a ride request. Once the driver has received a ride request and is heading to pick up the passenger, Uber and Lyft provide primary liability coverage, but other State Farm coverage types still apply.
So if an Uber driver caused an accident with a passenger in the car, Uber would pay for any liability claims. Then, the driver could file a claim with State Farm for collision insurance, rental reimbursement, or any other coverage types included on the State Farm policy.
Commercial Insurance
Commercial car insurance is an option for drivers who cannot purchase rideshare insurance, since rideshare coverage is not available in every state. Commercial policies are more costly, but they are a good investment given how expensive accidents can be without insurance coverage. Without rideshare insurance or a commercial policy, drivers will be personally responsible for any situations that are not covered by Uber or Lyft.
Uber and Lyft Insurance
Driving with Uber or Lyft can be divided into four periods. Both companies provide different coverage types and limits within these four periods, as listed below.
Uber and Lyft Insurance by Period
| Period | Lyft Insurance Coverage | Uber Insurance Coverage | Personal Car Insurance |
|---|---|---|---|
| 0 – App Off: Personal Use | None | None | Applies |
1 – App On: Waiting | $50K per person bodily injury liability $100K per accident bodily injury liability $25K per accident property damage liability | $50K per person bodily injury liability $100K per accident bodily injury liability $25K per accident property damage liability | No coverage |
2 – App On: Pickup | $1M for 3rd party liability Uninsured/underinsured motorist bodily injury MedPay or PIP Comprehensive and collision with a $2.5K deductible | $1M for 3rd party liability Uninsured/underinsured motorist bodily injury Comprehensive and collision with a $1K deductible | No coverage |
3 – App On: During Ride | $1M in liability coverage Uninsured/underinsured motorist bodily injury Comprehensive and collision with a $2.5K deductible MedPay or PIP | $1M in liability coverage Uninsured/underinsured motorist bodily injury Comprehensive and collision with a $1K deductible | No coverage |
Uber and Lyft coverage types and amounts can vary by state.
Uber and Lyft only offer comprehensive and collision on a contingent basis, meaning that you must have these coverage types on your personal car insurance policy for them to apply. It’s also worth noting that you cannot rely exclusively on the rideshare company’s insurance. You still need a personal car insurance policy for non-business driving.
How Much Is Rideshare Insurance?
Rideshare insurance usually costs around $6 - $27 per month or 15% - 20% of your premium when purchased as an add-on to a personal car insurance policy. On the other hand, commercial car insurance costs an average of $1,200 to $2,400 per year. Like any type of coverage, your rideshare insurance premium will vary based on your risk factors, including age, state, and driving history.
Rideshare Insurance Cost by Company
- State Farm: 15% - 20% of premium
- Allstate: $30 - $120 per year
- USAA: $72+ per year
- Safeco: $100 per year
- Mercury: $324 per year
Geico does not disclose a specific amount but does say that rideshare insurance usually costs slightly more than a standard policy.
Tips for Buying Rideshare Insurance
1. Plan for the Worst-Case Scenario.
If you drive for Lyft but would not be able to afford the company’s $2,500 comprehensive and collision deductible in the event of an accident, buying extra rideshare insurance is in your best interest. Similarly, if Uber or Lyft provides an important source of income for you, the additional coverage is probably worth it.
2. Consider what type of coverage you want.
Since rideshare insurance policies vary, determining what you need can help narrow your search. For example, you might want a policy with a deductible of $500 or less. Or you might decide to prioritize rental reimbursement coverage that will apply if you get into a car accident while driving for Lyft or Uber. Keeping these parameters in mind is important to protecting yourself financially.
3. Shop around.
Comparing quotes is always the best way to determine the cheapest car insurance option, regardless of what type of policy you need. Even if your current insurance company offers rideshare insurance, check to see if its competitors are offering a better deal on the coverage that you want.
4. Be honest.
Tell your insurance company that you drive for a ridesharing company and that you want the appropriate coverage. If you need to file a claim, be upfront about the circumstances, since they can drop you as a customer if you provide false information.
Ask the Experts
- What are the obstacles to insurance companies offering insurance for ride-hailing drivers in more states?
- How likely is it that a car insurance company will drop personal car insurance policy because the customer is driving for Uber or a similar service?
- Can a car insurance company really deny a claim because the driver sometimes uses the car to drive for a ride-hailing service?
Ask the Experts
- Adam F. Scales
Co-founder of the Rutgers Center for Risk and Responsibility and Professor of Law at Rutgers School of Law - Camden
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- J. Tyler Leverty
Associate Professorin the Department of Actuarial Science, Risk Management, and Insurance at University of Wisconsin–Madison,School of Business
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- Robert Litan
Non-Resident Senior Fellow in the Economic Studies Program at Brookings
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- Kyle Logue
Wade H. and Dores M. McCree Collegiate Professor of Law at The University of Michigan Law School
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- Peter Carstensen
Fred W. & Vi Miller Chair in Law at University of Wisconsin Law School
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- Janice C. Griffith
Professor of Law at Suffolk University Law School
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