What Does Rideshare Insurance Cover? You Must Know

If you drive for a ridesharing company, such as Uber or Lyft, you might already be aware that a personal car insurance policy typically does not cover "business use" of your vehicle. In other words, if you're in a car accident while you're on the clock, you could end up paying out of pocket for expenses such as vehicle repairs or an injured person's medical bills.

Most ride-share companies are required by state law to provide insurance for their drivers. But, if you use your vehicle for both personal and business purposes, you might want to consider additional coverage to help protect it. Here are some things to keep in mind about ridesharing insurance — sometimes referred to as ride-hailing insurance — and the types of scenarios it may help cover.

How To Get Rideshare Insurance

Some insurers offer a ride-hailing insurance endorsement you can add to your existing personal car insurance policy. If you drive for a ridesharing company (sometimes called a transportation network company, or TNC), the extra coverage offered by this endorsement may help fill gaps between the TNC's commercial policy and your personal auto insurance policy.

Another option may be a full ridesharing insurance policy, which combines both personal and business coverage into one auto policy.

Insurance premiums, coverage types and policy limits may differ among insurers, and the available coverage will also vary by state. Your insurance agent can explain what options are available in your area.

Ridesharing Coverage Gap: Business Use Vs. Personal Use

According to the National Association of Insurance Commissioners (NAIC), the major TNCs provide limited commercial insurance for their drivers who are using their personal cars for the TNC's business. Business use may include times when the driver is en route to pick up a passenger or has a passenger in the vehicle.

But, since personal car insurance generally excludes all business use, the driver may not be covered by either policy when he is available for hire but has not yet accepted a ride request, the NAIC says. A ridesharing endorsement may help fill that coverage gap. It extends certain coverages on your personal policy so that they apply during the "app on" period when you're waiting for a ride request.

So, if an accident occurs while you're waiting to be hired, the ridesharing endorsement may help prevent you from paying out of pocket for related expenses. Keep in mind, however, that if you don't have collision coverage on your personal policy, you will not have it under the endorsement, either. In that case, you would still have to pay for the full cost of repairs to your own vehicle if you have an accident while you're waiting for a ride request to come in. Similarly, if you don't have comprehensive coverage on your personal policy, you also will not have it under the ridesharing endorsement.

Tnc Coverage: Deductible Gap

A ridesharing endorsement may also help reduce your out-of-pocket expenses when it comes to paying a TNC policy's high deductible. Though some TNCs provide commercial insurance for drivers, if you get into an accident while driving for the company, you'll likely have to pay the TNC policy's deductible.

A deductible is what you pay out of pocket toward a covered claim. Collision coverage and comprehensive coverage each have separate deductibles. On a personal auto insurance policy, you may be able to select your collision and comprehensive deductibles — for example, $500 each.

On the other hand, when you drive for a TNC under the protection of its commercial insurance policy, you may have to pay higher deductibles for collision and comprehensive coverage — for example, $1,000 or $2,500. If you're involved in a covered collision while you're on your way to pick up a passenger or have a passenger in the vehicle, you'd have to pay the TNC's deductible out of pocket before commercial insurance benefits kick in to help repair your car.

A ridesharing insurance endorsement may help cover the gap between your personal auto policy's deductible and the TNC policy's deductible in this type of scenario. So, if your collision coverage deductible is $500, and the TNC's collision coverage deductible is $1,000, the ridesharing endorsement may help pay the $500 difference.

If you're thinking of becoming a rideshare driver for a service like Uber or Lyft, the Insurance Information Institute suggests that you discuss with your TNC its coverage types, limits and deductibles.

Once you know what coverage may be available through your ride-hailing company, you can talk to your agent about filling in any potential coverage gaps with a rideshare insurance endorsement.

How Much Does Rideshare Insurance Cost?

The cost of rideshare insurance depends largely on what type of coverage you buy. For instance, a rideshare endorsement may cost less than a separate rideshare insurance policy that provides coverage independent of your regular car insurance policy.

As with most insurance coverages, the higher your limits, the more insurance is likely to cost. If you add a rideshare endorsement to your car insurance policy, you'll typically find that your rideshare coverage limit is the same as the one you set for your personal car insurance policy. So, if you have a $100,000 liability limit on your regular policy, $100,000 is also the most your policy would pay toward a covered rideshare insurance claim. If you opt for a separate rideshare insurance policy, you'll likely need to set limits for that policy.

A local insurance agent can let you know what types of coverage are available to you and give you a rideshare insurance quote. Then, once you have the coverage that fits your needs, you can offer rideshare services with greater peace of mind.