Many people have turned to the gig economy to make ends meet. And while the cost to enter these industries is usually pretty low, protecting yourself from financial risk should be high on the list of things to do. If you drive for Uber or Lyft, or some other rideshare service, here are some things you should consider regarding your own insurance coverage and how to keep yourself protected while you make some money.
Why Rideshare Drivers Need Rideshare Insurance
It’s taken some time for insurance companies to work out exactly how to cover rideshare drivers. Now we are a few years in and though it may seem complicated, there are now guidelines for handling auto insurance when you drive for a ridesharing company or app-based delivery company.
The bottom line is that your personal car insurance will not likely cover accidents that happen while you are online with the service. And there are “gap” periods during a rideshare gig, such as when you are waiting for a request. If something happens during this period, your personal insurance probably won’t cover you and because you don’t have a request, the rideshare company probably won’t cover you either.
The most common rideshare companies, Uber and Lyft, separate each ride into three periods:
- Period 1: When the vehicle is being used and you have the app online and are waiting for a request
- Period 2: When the vehicle is being used, you have the app online and have accepted a request, but the passenger has not yet been picked up
- Period 3: When the vehicle is being used, and you are transporting the passenger(s), you have arrived at the destination and the passenger is exiting your vehicle
Rideshare companies offer different coverages for each of these periods. The coverage they offer is also limited to when a ride is accepted, while en route and when the passenger exits the vehicle. So, for instance, if you are online with the app but don’t have an active request and you are in an accident, you could be out of luck for coverage.
Companies that Cover Rideshare
To protect yourself, make sure you have the proper car insurance coverage for rideshare. Here are a few companies that cover rideshare drivers. The standard options and costs vary depending on what state you live in and what insurance provider you use.
State Farm – State Farm can extend your personal auto policy to cover rideshare. State Farm policies generally cover damage to the driver’s car, uninsured/underinsured motorists, medical coverage and rental reimbursement, but may not cover a driver’s liabilities to others.
Farmers Insurance – Farmers offers rideshare insurance also by extending a driver’s personal auto insurance coverage during the Period 1 gap time, from the time the app is online up to the time a rider is accepted. The company currently provides this type of coverage in 29 states.
Allstate – Allstate presents its Ride for Hire insurance plan that can fill some of the gaps. Keep in mind that this policy does not guarantee continuous coverage. It can help, however, and is an easy add-on if Allstate is your current provider. Just be sure to understand what you are and are not covered for.
The most important strategy for making sure your rideshare time is covered is to shop around. InsuranceWins can help you find the company that offers the best coverage for the best value. When you’re ready to shop around, just fill out our simple form and see how much you can save while protecting yourself as you work.