How does Driving for Uber/Lyft Affect Auto Insurance?

A cardboard cutout of a car on a table against a blue background with the words "Uber/Lyft Auto Insurance"

These days, more and more people are driving for rideshare services like Uber and Lyft to earn some extra money. If you’re thinking about becoming an Uber and/or Lyft driver, you’re probably already aware that each company has some strict requirements in place when it comes to the age and condition of your vehicle.

What you may not have thought about is whether or not your existing auto insurance coverage will be enough to protect you (and your paying passengers) while you’re driving for Uber or Lyft. What type of coverage is provided for Uber and Lyft—and when does it become effective? Here is some important information on how driving for Uber/Lyft affects auto insurance:

Meeting Basic License and Insurance Requirements

Just as you will need to provide proof of a valid driver’s license in order to drive for a rideshare company like Uber or Lyft, you’ll also need to provide proof of up-to-date auto insurance. In most cases, so long as you meet your state’s minimum requirements for liability and bodily injury coverage, you should be fine.

Keep in mind that specific requirements can also vary from one state to the next. Some states, for example, will actually consider you to be a commercial driver while you are driving for a rideshare service; as a result, you may need to obtain a commercial driver’s license before you can begin driving for Uber/Lyft.

Auto Insurance Exclusions: Driving for Hire

One of the most important things to be aware of when it comes to auto insurance coverage and driving for a rideshare service is that almost all personal auto insurance policies these days contain an exclusion for any situation where you are driving for hire. This means that your personal insurance policy might not cover you when you’re driving for Uber or Lyft. Specifically, most policies will have a clause that excludes coverage while a covered vehicle is being used “as a public or livery conveyance.” The best way to find out whether your policy includes such exclusion is to contact your insurance agent.

Uber and Lyft Liability and Contingent Coverage

The good news is that both Uber and Lyft provide their drivers with some basic insurance coverage that kicks in as soon as you start transporting passengers.

Once you’re logged into the app and awaiting a ride request, Uber and Lyft provide a certain amount of liability coverage for any accident where you are at fault. This liability coverage protects your passengers and includes up to $100,000 of total injury liability coverage per accident and up to $25,000 in property damage coverage per accident. Once you have picked up a passenger, Uber and Lyft’s liability coverage ramps up to a full $1 million. Keep in mind, however, that this coverage does not protect you or your personal vehicle.

Uber and Lyft also both offer what is known as “contingent” coverage for drivers who already carry their own personal comprehensive/collision coverage. With this coverage, you can receive payment for any damage to your vehicle that occurs while driving for the rideshare service, regardless of who is at fault. This coverage goes up to your vehicle’s cash value, minus any deductible (specific deductibles vary from one rideshare company to the next).

The Bottom Line: Talk to Your Insurance Agent

Auto insurance coverage can get a little complicated when you drive for a rideshare service like Uber or Lyft. In general, you shouldn’t expect your coverage to apply when you’re driving for-hire, but most rideshare companies provide their own basic protection that can cover your passengers and possibly even your personal vehicle in the event of a crash.

Still, it’s always a good idea to speak with your auto insurance agent if you’re thinking about becoming a rideshare driver. A lot of times, there are coverages you can purchase along with your existing policy to ensure you have the protection you need, even when you’re driving for-hire. Not all insurance carriers readily advertise this coverage, which is why speaking directly with your agent is always the best place to start. He or she will be able to assess your needs and help you find the right coverage in no time.

The last thing you want is to get into an accident while driving with a rideshare company, only to find out you don’t have the protection you need. To make sure that you’re properly covered, contact the experienced insurance agents at Schertz Insurance Agency. They offer a wide range of auto insurance policies to meet your changing needs as you start your rideshare driving career.