It's the moment that every Uber or Lyft driver dreads. You've gotten the notification and look away for just a second when you hear the dreaded "THUMP-CRUNCH!"
An accident. It happened in the fall of 2016 to Uber driver and mom Aylin Wojciechowski, whose story ran on Fox6 TV a few months later. She had told reporters that because she did not have a passenger in her car when she collided with another vehicle, Uber's insurance would only cover the damage to the other car. Wojciechowski was on the hook for $4,000.
The problem is a common one for ride share drivers. Personal auto insurance companies don't cover ride share drivers while they're working, so companies offer their own coverage to their driver-partners. Both companies' policies include:
$1 million coverage for damage to another driver or their property
bodily injury coverage for accidents involving uninsured or underinsured motorists
collision and comprehensive coverage for the driver's vehicle provided that said driver has collision coverage on his or her own policy.
Both companies have a deductible for comprehensive/collision coverage. Uber sets it at $1,000 while Lyft sets its deductible at $2,500. Glassdoor calculates that ride share drivers make between $6 and $17 per hour while Uber drivers make between $10 and $25, so that deductible works out to a lot of rides.
Ride share companies' coverage is available whenever a driver has a passenger or has accepted a request. It is not available if the Uber or Lyft app is off since the driver is not “working” during that time. Between turning the app on and picking up a passenger is when many drivers get into trouble – it's the same set of circumstances that surrounded Wojciechowski's accident back in 2016.
For insurance purposes, ride share companies define four periods of coverage for their drivers:
Period 0: The app is turned off. Your personal policy is your only coverage. Period 1: The app is turned on and you are waiting for a ride request. Your personal policy coverage continues as long as you have a ride sharing endorsement with an insurer. The ride share company's coverage is active on a limited basis. Period 2: You have accepted a ride request. The ride share company's policy is active. Period 3: The passenger is in the car and you are on the way to his or her destination. The ride share company's policy is active. As you might guess, Period 1 is where things get a bit iffy. First of all, coverage is liability only, which means it doesn't cover you or your car. It only covers damage to others or others' property. You get up to:
$50,000 for bodily injury to another party,
$25,000 in property damage, and
$100,000 total per accident.
If you don't have a ride sharing endorsement, you could be liable for any damage that you cause to another party.
There is some good news. Now that ride sharing has become so common, most major insurers now offer special insurance options for ride share drivers. Drivers in every state can find at least one insurance company that will cover them for their Uber or Lyft work.
Most ride share policies cost between $6 and $25 per month over the subscriber's basic premium. There are two different levels of coverage: gap coverage and extended coverage.
Gap coverage is exactly what it sounds like. It makes your personal policy active during Period 1 when, without this coverage, you would be restricted to the liability-only coverage that the ride share company offers.
Extended coverage makes it so that your personal policy is active throughout periods 1, 2, and 3. That typically means that you pay your personal deductible, not the ride share company's, and retain access to additional coverage such as towing or rental car access.
You can start by contacting your own insurance company and telling them that you are driving for a ride share company.
Do not skip this step! Many drivers decide to play “insurance roulette” and keep their ride share activity a secret from their insurers, hoping that they won't need to file a claim. Unfortunately, many insurers will cancel your policy if they find out that you've been driving your car to earn income.
When you call your insurance company, ask if they offer ride share insurance. If not, you may need to switch policies, even if your current company will keep you on without it. The odds that you'll have an accident while you're in Period 1 is comparatively low, but any odds above zero are too high when it comes to accident coverage.
If you can't get ride share insurance with your current insurer, search for companies that offer this kind of coverage in your state. Count your lucky stars if you're in a state that has more than one company offering insurance for ride share drivers. You might be able to find more competitive rates.
Another option is to do a comparative search for policies and then check which of those options offers ride share coverage. This might be the way to go if you're on a budget since you'll be able to pick the policy that will give you the most cost-effective option overall.
It takes some leg work. But when you get back on the road with coverage and peace of mind, it'll all be worth it.
Even though ride share companies have their own insurance, it doesn't cover you fully all the time.
Coverage is most questionable in the time between when you turn on the ride sharing app and when you accept a ride request.
Ride share company policies can have high deductibles, making accidents expensive for drivers.
Private insurers help you to fill the gap in ride share policies by offering their own coverage, which you purchase in addition to your personal car insurance.
Policies differ by state. To protect your income, do a thorough search of what's available.