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Ridesharing has become a popular way for people to earn extra money, but it's caused a car insurance conundrum. Insurers weren't certain how to handle accidents that happened while a customer worked as a rideshare driver, and that led to the birth of a new product: rideshare insurance. If you work for Uber or Lyft or you're thinking about doing so, here's what to know about coverage.
Rideshare insurance is a special type of car insurance for Uber drivers, Lyft drivers, and food delivery drivers. It ensures they're fully protected in the event of an accident, whether they are working or not.
Some insurers offer standalone rideshare insurance, which replaces personal auto insurance. Others add ridesharing endorsements to an existing auto policy. This coverage is different from the Uber, Lyft, or DoorDash insurance these companies provide to their drivers.
Rideshare insurance offers the same coverage as personal auto insurance, including:
The major difference between a personal car insurance policy and rideshare insurance is when the driver is covered.
Both policies cover drivers when they are using their vehicles for personal use, whether or not they sometimes drive for a rideshare or delivery service. But as soon as the app goes on, a personal policy no longer applies. That's true even if the driver has yet to pick up a rider. Drivers need a rideshare policy to be fully protected in all scenarios.
Uber and Lyft do provide their own insurance to their drivers, and food delivery drivers can get DoorDash auto insurance. But it's not as comprehensive as you might think. Here's a look at the coverage Uber insurance and Lyft insurance provide at each stage in the ridesharing process.
This is the stage when drivers are the most vulnerable if they don't have a separate rideshare insurance policy. Uber and Lyft driver insurance provide bodily injury liability coverage of $50,000 per person and $100,000 per accident, plus $25,000 in property damage coverage. This only applies if the driver doesn't have their own rideshare insurance.
That should be enough to cover most minor accidents, but major accidents could leave drivers with enormous bills.
Once you're en route to a passenger, Uber and Lyft offer $1 million in liability coverage, plus uninsured and underinsured motorist liability coverage.
Drivers also receive contingent collision and comprehensive coverage. This pays the driver for damages to their car up to the cash value of the vehicle. But there's a caveat: drivers must have collision and comprehensive coverage on their personal auto insurance policies or this coverage doesn't apply. Drivers must also pay a $2,500 deductible. Some Uber vehicles offered through the Vehicle Marketplace (which helps connect drivers who don’t own a vehicle with rental, leasing, and finance providers) are only subject to a $1,000 deductible.
Uber and Lyft's coverage for driving with a passenger on board is similar to their coverage for drivers en route to the passenger. This coverage applies until the driver drops the passenger off. Then, coverage returns to the limited version described in Stage 1 above until a driver picks up the next passenger.
Ridesharing insurance isn't required by Uber or Lyft, but auto insurers may require that rideshare drivers have this coverage. If a driver doesn't have it and gets into an accident while working, an insurance company may refuse to pay for the claim. That could leave drivers with expensive bills to pay on their own.
Many of the best rideshare insurance providers are also the best companies for standard car insurance.
State Farm allows its customers to add a ridesharing endorsement to regular auto insurance. The company is an industry leader in terms of customer service, which can make filing a claim less of a headache. And when drivers file a claim, they pay the smaller of their State Farm or rideshare company's deductible.
Geico offers standalone rideshare insurance policies that replace personal auto insurance. This means drivers only have a single policy to manage. It also doubles as delivery driver insurance. Geico rideshare insurance is available to drivers in most states. But since it's technically considered a commercial policy, it can be a bit more expensive.
Allstate offers an affordable auto insurance ridesharing endorsement for drivers on a budget. It pays the difference between the driver's Allstate deductible and their rideshare company deductible in the event of an accident. Its premiums are also pretty affordable compared to those of other insurers.
Progressive lets drivers add cheap rideshare insurance to an existing policy and customize coverage based on how much they want to pay. In the event of a crash, it also pays the difference between the deductible on a driver's personal car insurance policy and their Uber or Lyft deductible.
USAA is widely considered one of the best auto insurers, but it's only available to current and former military members and their families. Uber or Lyft drivers in one of these groups should check out its ridesharing coverage. Rates are fairly reasonable, and the company is known for its great customer service.
Rideshare insurance is becoming more widely available. If drivers can't find coverage near them right now, new possibilities may crop up in the future. As an alternative, drivers can look into purchasing a commercial car insurance policy that covers their rideshare driving. But these types of policies are usually more expensive than the typical cost of car insurance.
A personal auto insurance policy typically doesn't cover accidents that occur when a ridesharing app is on. That's where a rideshare insurance policy comes in.
Most states offer some type of rideshare car insurance and this type of coverage is becoming more readily available. Drivers in states where rideshare coverage isn't available can look into a commercial auto insurance policy instead.
If a driver works for a rideshare company and does not tell their insurer, the insurer could drop them as a client. So it's best to notify the insurer as soon as you begin working as a rideshare driver.
If you don't have rideshare insurance, you could lose your personal auto insurance coverage. You could also face significant out-of-pocket costs in the event of an accident.
Rideshare insurance is more expensive than personal auto insurance, but less expensive than commercial policies. Rates are different for everyone, so compare quotes from several companies to see which can offer you the best deal.
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