Uber and Lyft are rideshare services that enable you to use your personal vehicle to make money. Riders call you using an app and pay you to take them to their destination. All transactions take place online, so no actual money changes hands.
The process works well for drivers like you and your riders as long as nothing unpredictable happens. But what happens if you get into an accident. Do the rideshare companies cover any liability using their own commercial car insurance policies? Can you file a claim with your personal car insurance policy or do you need special coverage?
What else is different about car insurance when you’re an Uber or Lyft driver? Let’s find out
Ridesharing Phases
Insurance companies divide ridesharing into three phases. Your coverage and payouts differ with each phase.
Phase 0
The app is closed, which means you are not looking for riders. Your auto insurance works normally because you’re using your vehicle for personal reasons. Your insurer covers any accidents as defined by your car insurance policy.
Phase 1
The app is open because you’re looking for riders but have not accepted a ride request. If your own coverage does not apply, Uber and Lyft provide coverage if you are at fault up to the following amounts:
- $50,000 per person injured, not including you.
- $100,00 total for injuries, which is the maximum amount that Uber or Lyft pays, no matter how many people are injured, not including you.
- $25,000 total for any property damage, not including your car.
Remember, this third-party car insurance only covers losses to others who are injured or suffer property damage. It does not cover your own injuries or damage to your car. You need to approach your own insurer first.
Phase 2
You’re matched to a rider and are on your way for the pick-up.
Phase 3
Your rider is in your vehicle. This phase ends when your rider leaves the vehicle.
Coverage for both Phase 2 and 3 is identical.
If you are responsible for the accident, the rideshare giants cover you as follows:
- Uber grants up to $1,000,000 to pay for injuries from someone who has little to no car insurance. If you are involved in an accident with somebody who is uninsured or underinsured and you are not at fault, you also get comprehensive and collision coverage with a $1,000 deductible.
- If you have collision coverage as part of your personal car insurance, Lyft also provide you comprehensive and collision coverage with a $2,500 deductible.
As in the other phases, your injuries are not covered. Damage to your car is only covered if you have a rideshare endorsement on your policy.
Rideshare companies absolve themselves from any need to provide insurance by classifying their drivers as independent contractors rather than employees.
While employees are usually protected by their companies with appropriate coverage, independent contractors are responsible for their own expenses, including car insurance and paying for their own accidents.
Rideshare Endorsement
When people started becoming rideshare drivers, insurers could’ve classified them as commercial drivers because they were on the road for a living. The policies would’ve been exorbitant because commercial drivers face greater risks and consequently higher premiums compared to personal drivers.
Instead, car insurance companies created a ridesharing endorsement, which you can add to your policy. It covers liability and property damage to your car but costs less than commercial coverage.
Unfortunately, it is not available in all states and may only cover you during certain phases, such as Phase 1.
- If you have this endorsement and get into an accident during Phases 2 and 3, you must first submit your claim to your insurer. Anything above your policy limit is then paid for by Uber or Lyft up to the vehicle’s actual cash value, with deductibles of $1,000 for Uber and $2,500 for Lyft. A deductible is the amount you have to contribute before your insurance pays you.
- If you do not have this endorsement, rideshare companies will not cover you until you’ve sent the claim to your insurer. Unfortunately, making this claim tells them that you’ve violated your policy terms, which demands that you use your vehicle only for personal and not commercial uses. Your insurer may cancel your policy as a result.
California Car Insurance Coverage for Rideshare Drivers
With the passing of Proposition 22, rideshare drivers in California now get Injury Protection insurance. If you are hurt in a rideshare accident in the state, the payout can pay for the following benefits:
- Medical expenses of up to $1,000,000 with no co-pay or deductible.
- Disability payments of up to $1,324 per week to replace lost earnings.
- Survivor benefits of up to #320,000 for dependents who are eligible.