Ride-share and delivery companies such as Uber, Lyft, DoorDash, Grubhub or any number of similar companies have become an integral part of our society.
Short on time and need to grab lunch? No problem; order some DoorDash and let someone bring it to you.
Friends can’t give you an early morning ride to the airport? That’s alright; call an Uber.
Using these services has become second nature to many of us. Not only that but driving for one of these companies is a great, flexible way for people to earn some extra money, leave their day job altogether, or just help ease some stress in the event that they find themselves between jobs for longer than anticipated.
If you or someone you know is thinking about driving for one of these companies here is what you need to know as it relates to your insurance.
If you still have questions about rideshare insurance after reading this article, you can contact us for a free quote.
What is Rideshare?
When you sign up to drive either as a Rideshare driver (Uber, Lyft, etc.) or a delivery driver (DoorDash, Grubhub, UberEats) you are becoming an independent contractor working with said business.
Basically, you are operating your own business under the umbrella of Uber (or whichever rideshare or delivery company you choose to drive for).
They provide the software, and you provide the manpower and the car. They match you with customers and update the software that makes everything possible in exchange for a small fee.
Here’s where the insurance comes in.
If you choose to drive for a rideshare or delivery company, you’ll be driving your personal vehicle for business use. This means that your personal auto insurance will not cover/approve any claims that occur while you are logged on to your respective app, whether you are actively driving or just waiting for a ride request/delivery request.
For this reason, it is strongly recommended that all rideshare drivers or delivery drivers invest in some form of rideshare insurance.
Don’t Rideshare and Delivery Platforms Like Uber and DoorDash Provide Insurance?
Most do, but there are some caveats.
If you are going to drive for Grubhub or Instacart, you need rideshare insurance. These companies do not offer any insurance for their drivers.
With most other delivery companies, policies only cover what they consider “active delivery” time – Meaning from the time you accept an order until the time you make the delivery. So, if an incident were to occur while you are waiting for a job, you would be liable for any damages. As stated earlier your personal insurance will NOT cover claims that occur when you are logged in to drive for the day.
With Uber and Lyft, the two main rideshare companies, the coverage varies from state to state. The coverage also changes depending on whether you are “active” or waiting. You will begin every driving day in the “waiting” phase. This is when you have logged in to drive but have not yet received a ride request. Once you have accepted a ride request, you are considered “active” until the time you drop your passenger off.
Here’s how the coverage changes:
The coverage during the waiting phase is 3rd party liability insurance in accordance with your state or city’s minimum requirements.
Throughout the “active” driving phase, the coverage becomes 3rd party auto liability of $1 million, uninsured/underinsured motorist bodily injury, and contingent comprehensive & collision up to the cash value of your car ($2500 deductible).
What Is Rideshare Insurance and Why Do I Need It?
As you may have noticed, every company is different in terms of how much coverage they offer. Yet, even with the best company coverage plans, you may be on the hook for any damage sustained to your vehicle during the waiting phase and, if offered, you still must meet a deductible for any incidents that occurred while you were active.
Rideshare insurance makes sure that your personal property is covered throughout the entirety of the rideshare/delivery process. For rideshare/delivery companies that don’t offer insurance, it bridges the gap between your personal use and business use of your vehicle.
Since rideshare has only begun to gain momentum within the last decade, some insurance companies don’t yet offer rideshare plans or only offer it in a limited number of states. Be sure to check with your current insurance provider to see if this is the case. If they do not offer rideshare plans or don’t offer them in your state, you may need to find a provider that does. Another option would be to take a look at commercial auto insurance plans, but the premiums for these can be considerably higher than most rideshare premiums.
It is worth noting that not all rideshare/delivery companies require you to carry rideshare coverage. Lyft only requires personal auto insurance in accordance with your state minimum standards.
However, many of the rideshare plans available are very affordable. Depending on the plan you can expect to add 15-20% to your premiums for State Farm and Allstate has plans ranging from $30-$120 per year. Others offer options like Hybrid plans. For this reason, we strongly recommended anyone driving rideshare or delivery get a rideshare plan. It’s worth the investment.
How Much Rideshare Insurance Coverage Do I Need?
Things to consider when purchasing a rideshare plan are:
- What is required by my state/city?
- Does my current insurance company offer rideshare coverage? In my state?
- What amount of coverage does the rideshare/delivery company provide? What do they require or recommend?
- What amount of risk do I feel comfortable with?
- What is the cost?
At Portland Insurance we help customers quickly compare rates and answer any questions they may have about rideshare insurance in their state.
Give us a call today and let us help you find a plan that works for you.
*Commercial auto insurance is usually reserved for truckers, taxi drivers, or anyone who drives for a living as well as company-owned vehicles. Some states may require it depending on the law.