Rideshare insurance

The major ridesharing companies, like Uber, Lyft, and other TNCs provide limited commercial insurance for their drivers while using their personal cars, explains the National Association of Insurance Commissioners (NAIC). These TNC-provided policies are designed to offer basic coverage for injuries and property damage, but whether you’re covered or not will depend on whether you have a passenger in the vehicle or not.

Since personal car insurance generally excludes all business use, gaps between your personal policy and TNC coverage may arise. A ridesharing endorsement from your insurer may help fill those coverage gaps. It extends certain coverages on your personal policy so that they apply during the times when your TNC’s insurance policy doesn’t cover you.

So, let’s say you sign into your ridesharing app, and while you’re waiting for a ride request to come through, you swing through a drive-through for breakfast. You pull out of the restaurant too quickly, and get in a fender bender. In this case, a ridesharing endorsement may prevent you from paying out of pocket for related expenses.

Rideshare insurance can take the form of an endorsement to your personal car insurance (in other words, an extension of your coverage for ridesharing use), or a standalone policy. In either form, rideshare insurance should include a few basic coverages.

Liability coverage

Liability coverage pays for damage you do to someone else’s property, or injuries you may cause. It’s the most basic, legally required coverage on your personal policy, but unless you have a ridesharing endorsement, it likely won’t apply when you’re signed into a ridesharing app.

By adding ridesharing coverage to your policy, your personal policy’s liability coverage may kick in when the TNC’s insurance doesn’t.

Collision and comprehensive coverages

Collision and comprehensive coverage are there to help pay for repairs to your own vehicle if it’s damaged in a collision or an incident like a natural disaster. If any of these events happen while you’re signed into a ridesharing app, a ridesharing endorsement can help you pay for repairs to your vehicle.

If you don't have collision coverage or comprehensive coverage on your personal policy, you won’t have them under the endorsement, either. In that case, you would still have to pay for the full cost of repairs to your own vehicle.

Medical payments/personal injury protection (PIP)

While your liability coverage helps pay for injuries to passengers and third parties, your own medical bills are a different story. Check with your insurer to see whether adding a ridesharing endorsement will extend your medical payments or PIP coverages. If not, you may be able to purchase additional coverage for your medical bills through your TNC.

Since driving for a ridesharing company involves three different types of auto insurance – your personal policy, a ridesharing endorsement to your personal policy, and your TNC’s coverage – it can be tricky to understand how they all interact.

Basically, it boils down to three phases of coverage, according to the NAIC.

Phase one: Awaiting a ride request

As soon as you sign into an app like Uber or Lyft, your personal auto insurance policy will likely consider you “on the clock”, meaning you’re officially entering business use.

This is when you’re most likely to have an insurance gap, because your TNC’s policy may only offer limited coverage until you accept a ride. Uber, for instance, offers minimal liability coverage with a limit of $25,000 in property damage and $100,000 for injuries if you’re at fault for an accident. The TNC’s policy won’t cover your injuries or damage to your vehicle unless it’s required by your state.

By adding a ridesharing endorsement to your personal policy, the comprehensive and collision coverages from your personal policy (if you have them) could kick in to help repair damages to your own vehicle.

Phase two: Picking up a passenger

Once you accept a ride and you’re headed to pick up a passenger, your TNC’s coverage kicks in. Their policy will typically provide $1,000,000 in coverage for other drivers’ vehicle damage and injuries. You may have to pay a deductible as high as $2,500 before their insurance will repair your vehicle, and it may not cover your own medical bills if you’re injured.

If you’ve added ridesharing coverage to your personal policy, it can help you pay that high deductible, and it may fill in the gaps in your TNC’s policy.

Phase three: En route with passenger

When you’ve picked up your passenger and you’re headed to their destination, the same TNC policy will apply as during period two, but with a passenger and their belongings in your vehicle, it’s even more important that you’re financially protected, should you be deemed responsible for causing an accident. Consult with your personal insurer to find out whether a ridesharing endorsement can help provide you additional peace of mind.

Personal use

You’ve dropped off your last passenger of the day, you’ve signed out of your ridesharing app, and you’re headed home. At this point, your personal auto insurance policy is back in effect.

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, you may have to pay higher deductibles for collision and comprehensive coverage under their policy — even as high as $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 that amount out of pocket before their insurance benefits kick in to help repair your car.

In this scenario, a ridesharing insurance endorsement may help cover the gap between your personal auto policy's deductible and the TNC policy's deductible. So, if your collision coverage deductible is $500, and the TNC's collision coverage deductible is $2,500, the ridesharing endorsement may help pay the $2,000 difference.

If you're thinking of becoming a rideshare driver for a TNC like Uber or Lyft, the Insurance Information Institute (III) suggests that you discuss what coverage types, limits and deductibles they offer through their commercial policy. Then, you can talk to your insurance provider about filling in any potential coverage gaps with a rideshare insurance endorsement.

The cost of rideshare insurance depends largely on what type of coverage you buy. For instance, a rideshare endorsement may cost less than a standalone 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 limits are the same as the ones you set for your personal car insurance policy. So, if you have a $100,000 bodily injury 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 separately.

The first step is to check with your current car insurance provider. 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, the extra coverage offered by this endorsement may help fill gaps between their 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 provider can explain what options are available in your area.