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Insurance options for rideshare drivers

With the rising popularity of rideshare services, rideshare insurance policies are beginning to hit the market. If you've decided to try to make some extra money as a driver, can you afford not to be covered?

Finding your way around town, dealing with inebriated passengers, and working less-than-stellar hours can make rideshare driving a stressful way to earn extra cash. Another major stressor: if you are involved in an accident at the wrong time, you can be on the hook for some pretty big bills.

Rideshare policies can help alleviate some stress by extending your personal insurance into the territory of rideshare driving. Having full coverage at all times while you are out on the ridesharing streets can put your mind at ease - as long as a policy is available in your area.

Insurance choices for rideshare drivers are limited

Rideshare insurance is starting to come into its own with new policies rolling out in a different state nearly every month. Despite the recent activity, in several states, there are only one or two insurers offering coverage (see the table showing which insurers offer ridesharing insurance in each state), so rideshare drivers have little choice but to accept the price and coverage levels offered without the benefit of competitive pricing.

Just like any car insurance policy, the details of rideshare coverage vary by insurance company. Some insurers only cover Period 1, while others cover all periods. The company for which you drive can also make a difference. Some policies are limited to Lyft while others are specific to Uber drivers, which can be a problem if you drive for both.

Rideshare timeline and coverages
Rideshare timelinePersonal auto insurancePersonal rideshare endorsementRideshare company (TNC) insurance
Offline: App is off, personal drivingYes

Personal auto insurance in effect
Yes

Some insurers have a rideshare endorsement for this period. Otherwise, coverage will continue under personal policy portion.
No
Period 1: Driver is online and available for hireNoYes

This is the riskiest period for drivers, so personal rideshare policies can help fill the gap.
Yes

Contingent liability coverage of 50/100/25
Period 2: Driver accepts bid, en route to pick-up locationNoYes

Rideshare company insurance is primary, but some personal insurers have endorsements for this period.
Yes

$1 million liability, $1 million uninsured/underinsured motorist bodily injury, contingent collision and comprehensive up to actual cash value (Deductibles from $1,000 - $2,500)
Period 3: Passenger in vehicleNoYes

Rideshare company insurance is primary, but some personal insurers have endorsements for this period.
Yes

$1 million liability, $1 million uninsured/underinsured motorist bodily injury, contingent collision and comprehensive up to actual cash value (Deductibles from $1,000 - $2,500)
Return to Period 1: Passenger exitsNoYes

Reverts to Period 1 coverage 
Yes

Contingent liability coverage of 50/100/25

What are ridesharing companies covering?

Rideshare drivers receive significant liability coverage from their transportation network company (TNC), such as Uber or Lyft, as long as a passenger has been assigned. However, low limits and coverage gaps during the rest of the drive can end up costing you greatly if you are in an accident.

When the ridesharing app is open but a passenger has not been assigned, referred to as Period 1, Uber and Lyft offer low coverage limits for drivers: Liability coverage of 50/100/25, which translates into $50,000 for bodily injury per person, $100,000 for bodily injury per accident, and $25,000 for property damage.

"The liability offered by Uber and Lyft during Period 1 is only contingent liability, meaning the companies' liability policy only comes into play if a driver's personal insurance does not cover an incident," advises Penny Gusner, consumer analyst for Insure.com.

"If a driver is involved in a serious accident, these low limits would quickly be exceeded, and the driver would have to cover the balance. I recommend coverage limits of at least 100/300/50 when it comes to liability," continues Gusner.

Comprehensive and collision are not offered in Period 1, so the cost of fixing your vehicle in the event of an accident falls directly on you. Collision and comprehensive are offered by the TNCs during Periods 2 and 3, but the coverage is contingent, so you must have these coverage on your personal policy. And the deductible can be very high - $2,500 if you are driving for Lyft.

Confusing rules, low coverage limits, and high deductibles have left some drivers in difficult situations, but insurance companies have started to bridge this coverage gap by offering rideshare policies. Coverage periods vary and selection is limited, but a rideshare policy means you no longer have to lie about your second job, and you will be covered in the event of an accident.

Existing rideshare policies

Rideshare policies vary by price, coverage periods, and even rideshare company, but despite the limitations, if a policy is available in your state, it is likely a good idea to get one.

"If a rideshare policy is available in your area, buy one," advises Gusner. "A rideshare endorsement is the only way to ensure that you are fully covered while working as a rideshare driver. Without one of these policies, you could find yourself on the hook for some big bills if you are in an accident at the wrong time."

Policies can be broken down into two types: Period 1 Only and All Periods. For Period 1 Only Coverage, these policies extend your personal auto coverage into Period 1 only. Once you have been assigned a passenger, coverage changes over to the TNC's policy. Your personal coverage has ended, and the TNC's collision coverage is contingent and carries a large deductible.

Companies offering ridesharing policies

A few companies are offering rideshare policies that cover all phases of rideshare driving, so you can get your car fixed regardless of when the accident happens by paying your normal deductible. While these policies are probably your best bet, they are not yet widely available and some are TNC-specific.

"Any and all coverages the customer has while using the vehicle for personal use are included on our endorsement, and customers can choose their coverage limits," says MetLife spokesperson David Hammarström.

Other companies, like Farmers, offer only a Period 1 endorsement. "Drivers have the same coverages during Period 1 that match their underlying coverages, including comprehensive, collision and uninsured/underinsured coverages, providing drivers with seamless coverage. In addition, drivers are not limited to any specific rideshare company," says Luis Sahagun, media spokesperson for Farmers.

Ridesharing insurance coverage by state and insurance company

As of July, 2018

Insurance companyStates availablePeriods coveredCost (above personal policy)
AllstateAK, AL, AR, AZ, CA, CO, CT, DC, DE, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NM, NV, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WYAll*Adds extra $15 to $20 to annual personal auto policy premium
American Family Period 1Adds about $15 a month to policy costs.
ErieIL, IN, KY, MD, OH, PA, TN, VA, WV, WI & D.C.AllEstimated to be $9 to $15 extra per month
EsuranceOnly in CaliforniaPeriod 1Available with quote
Farmers InsuranceAL, AR, AZ, CA, CO, GA, FL, IA, ID, IL, IN, KS, MD, MI, MN, MO, MT, ND, NE, NJ, NM, NV, OH, OK, OR, TN, TX, UT, WIPeriod 1Estimated 8 percent increase in rates in California, estimated $15 per month in other states.
GeicoAL, AR, AZ, CA, CO, CT, DC, DE, FL, ID, IL, IN, IA, KS, LA, ME, MD, MA, MN, MS, MO, MT, NE, NH, NM, ND, OH, OK, OR, PA, RI, SC, SD, TN, VT, VA, WA, WI, WV, WYAllLess than traditional commercial policy (estimated to be $25 extra per month)
MAPFREMAPeriod 1Available with quote
MercuryAZ, CA, GA, IL, OK, NV and TXAll**Mercury is advertising that the coverage "can cost as little as 20 cents a day," in addition to your usual personal auto policy premium.
MetlifeCA, CO, IL, TX & WAPeriods 1, 2***Premiums will vary based on mileage driven for ridesharing (estimated to raise rates by 10%)
ProgressiveAL, AZ, CO, DE, GA, ID, IL, IN, IA, KY, ME, MA, MI, MN, MS, MO, NE, NM, ND, OH, OK, PA, RI, SD, TN, TX, VA, WVAllAvailable with quote
SafecoAZ, CO, IL, IN, KS, MN, MO, OK, OR, TX, UT, WA & WIPeriod 1Estimated to be less than $10 a month
State FarmAL, AZ, AR, CA, CO, CT, DE, GA, FL, ID, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, ND, OH, OK, OR, PA, SC, TN, TX, UT, VT, VA, WA, DC, WV, WI, WYAll**15% to 20% above regular policy according to website
TravelersCO & ILPeriod 1Available with quote
USAAAL, AZ, CA, CO, GA, IA, IL, IN, KS, KY, MA, NJ, MD, ND, NE, NV, OH, OK, OR, TN, TX, WA, WY.Period 1An extra $6 to $8 per month, or approximately $40 to $50 per six-month policy term.
* Period 1 - all coverages, Period 2 & 3 - Allstate provides deductible help in certain situations
** Period 1 - full coverage available, Periods 2 & 3 - Mercury & State Farm provide coverage in excess of ridesharing company coverage
*** MetLife initially only covered Lyft drivers, and for all three periods of ridesharing services. In 2017, MetLife began to cover all ridesharing companies, but only for Period 1 & 2. However, in-force Lyft policies covering all three periods were grandfathered in so coverage still applies to all phases in those cases.

How does rideshare coverage compare to taxi insurance coverage?

Ridesharing policies are much less expensive, but commercial policies for taxis are usually more comprehensive. Also, pricing could be a fairly big jump from your normal policy. "It's important to remember that Farmers introduced this coverage to provide drivers with a more affordable option than commercial policies, which could be significantly more expensive," says Sahagun.

"Taxicabs are required to carry primary commercial auto liability insurance coverage, which covers the vehicle 24/7 for any mishaps. This form of insurance covers any contingency," explains Dave Sutton, spokesperson for the public-awareness campaign website 'Who's Driving You?'

The much higher cost of these policies often leaves taxi drivers at a disadvantage to rideshare drivers. "Typically, primary commercial auto liability insurance coverage costs four or six times the amount of personal insurance," says Sutton.

Having, or not having, the proper coverage out on the road has ramifications for others as well as the driver. If you're considering becoming a rideshare driver, be sure to examine all options available in your area. You're getting into the rideshare business to make money. Don't allow a gap in your coverage to cost you.

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