Rideshare Insurance for Car Drivers: Where to buy it, What it covers

By Randy Luton | Last Updated: 12/06/2022

Key Insights

  • Rideshare insurance is for every driver that works with either an online delivery app company or a ride-hailing / online taxi booking company.
  • The existing standard or personal policy of a driver will not cover rideshare coverage.
  • Most of the ridesharing or delivery companies do not provide coverage for the driver if he or she is not working; hence rideshare insurance is important.
  • Rideshare insurance can be bought only as an add-on to your existing personal policy.
  • The cost of this coverage varies from company to company and the method of calculating the cost also differs a lot.

If you are someone who drives Uber, Lyft or any other rideshare companies and you believe that the coverage provided by your employer company is enough then this blog is for you. Yes, we know that rideshare companies provide car insurance coverage but there is no guarantee that it will provide coverage to you or the passengers. This is when Rideshare Insurance comes into the picture.

RateForce have curated this blog with an intention to help all the drivers understand the impact of rideshare insurance on their life. Keep reading till the end to understand everything about this coverage type:

What is Rideshare Insurance?

Rideshare insurance is additional coverage that protects online taxi booking company’s drivers and delivery persons of online delivery companies. Most of these companies do not provide a complete package to these drivers hence they need rideshare coverage.

Why Delivery, Uber, and Lyft drivers need rideshare insurance?

Do you often think about this question “Do I need rideshare insurance”? If yes, then here’s your answer:

If you are driving your car to earn money then you need rideshare insurance. It can be to drive an Uber, Lyft, or Grab or it can be to drive a car to deliver stuff from apps. Your personal auto insurance company will not cover your vehicle while you are working.

In case you get into an accident and the company gets to know that you use your vehicle for rideshare or delivery work then they might cancel your policy too. This is the major reason that you need rideshare insurance.

Moreover; the delivery or cab companies provide coverage while you are working only till the time you have your app on. That means if your app is not working for some reason or you are not connected to the internet then you are not covered by any insurance company.

Lyft and Uber insurance

Uber as well as Lyft ride-hailing companies provide minimal coverage options. The time you accept a ride and start the route your insurance policy starts working.

To understand the working of insurance in cab companies let’s check the phases of rideshare auto insurance:

Phase 0: The app is turned off and not working. At this time your personal policy will cover you and your employer company is not responsible for your coverage.

Phase 1: The app is turned on but you have no ride requests. Until you get any request or you accept any request you will not be covered by your personal auto insurance company. If you have a rideshare additional coverage then you will get the coverage otherwise your rideshare company may or may not cover you. Here your employer company’s coverage will be limited and will be dependent entirely on your company.

This phase provides liability-only coverage:

  • $50,000 bodily injury per person.
  • $100,000 bodily injury per accident.
  • $25,000 property damage per accident.

Phase 2: You have accepted a request and you are now en route to the passenger. At this time your employer company will provide you with full coverage.

Phase 3: You have reached your passenger’s pickup point and the passenger is in your car. Now also you will get complete coverage and your employer company will be responsible for you and the passengers.

For both phase 2 and 3 the coverages are :

  • Liability: $1 million per incident.
  • Uninsured/underinsured: Depends on the state laws
  • Comprehensive and collision**: As per the value of your car and the fact that the driver also has comprehensive and collision coverage on the personal policy.

Both the leading rideshare companies provide similar coverage to the drivers but they charge differently for comprehensive and collision coverage.

Rideshare insurance for delivery app drivers

Now let’s talk about the delivery driver; people who work for delivery companies like Instacart, and Grubhub mostly depend on their employer. It is important to note that the drivers from Grubhub and Instacart don’t get any coverage from the company and they are required to buy personal coverage to work for them. While Doordash provides liability coverage only while the driver is en route to the delivery.

Just like rideshare companies, delivery apps are also dependent on phases. Here are the phases that a delivery company considers for insurance claims:

Phase 0: The delivery app is turned off. At this phase, your personal policy will cover you.

Phase 1: The delivery app is now on but you are waiting to get an order to deliver. If you have a personal policy that covers the ridesharing option then you will get coverage. Otherwise, you will be dependent on the delivery company. There are some companies that provide coverage at this time and there are some that don’t.

The driver will get liability only coverage as follows:

  • $50,000 bodily injury per person.
  • $100,000 bodily injury per accident.
  • $25,000 property damage per accident.

Phase 2: You have accepted an order and now you are en route to pick up the order. Just like Phase 1, you will be dependent on the insurance companies and only they make the decision if you are covered or not.

Phase 3: You have picked up the order and now you are en route to deliver it. At this phase, your insurance company will provide complete coverage.

For phase 2 and phase 3 the driver will get liability as well as comprehensive and collision coverage:

  • Liability: $1 million per incident.
  • Comprehensive and collision**: Based on the value of the car and the fact that the driver has comprehensive and collision coverage on the personal policy.

Where to get rideshare insurance?

Almost all the leading auto insurance companies provide rideshare insurance. You can get in touch with any of these companies and ask for a quotation. Moreover; you can also ask for additional coverage from your existing company. Let’s have a look at some of the

Best rideshare insurance companies

  1. Allstate
  2. USAA
  3. Progressive
  4. Erie
  5. State Farm

Allstate

Allstate provides a rideshare policy that includes the deductibles for the rideshare company policy. Lyft ride-sharing company provides coverage for the drivers but with a deductible of $2500. In case you get into an accident then you will have to pay expenses up to $2500 from your pocket.

The company provides seamless methods to file claims. The drivers get the option to file a claim online via their website or mobile app or they can file a claim offline by calling the customer service department of the company.

The estimated cost of adding rideshare coverage with Allstate: $20 per year

Pros of Allstate

  • Affordable coverage options for all the drivers.
  • Rideshare policies are available in almost all the states of the country.
  • Covers deductible amount to help the drivers save money during claim filing.

Cons of Allstate

  • The driver is required to have an Allstate auto insurance policy to add this coverage as an add-on.

USAA

USAA is popular for its overall customer and claims satisfaction ratio. The rideshare coverage policy of the company covers drivers from Uber, Lyft, Grab, and all the other popular ride-hailing companies.

The process of filing the claim is also very easy with the company. The driver can apply online, file the claim through an agent, or can call the company’s representative for the claims. The company itself has a partnership with more than 2900 repair shops, still the drivers get the option to select their own preferable shop.

The estimated cost of adding rideshare coverage with USAA: $72 per year

Pros of USAA

  • The company has scored some excellent third-party ratings for claim satisfaction as well as customer service.
  • The policy premiums are affordable for most drivers.
  • Deductible and coverage limits are flexible and drivers can select easily.

Cons of USAA

  • The policies are only for military personnel or their immediate family members.
  • The company does not sell its policies in all the states of the country.

Progressive

Progressive is also popular for providing ridesharing coverage for both online cab booking companies and online delivery apps. The coverage works only when you have logged into the app and are driving to either pick a passenger or order.

The company provides coverage for the gap between your personal coverage deductible and your employer company’s deductible as well. The reputation of the company is good in terms of customer satisfaction score and claim satisfaction score.

The estimated cost of adding rideshare coverage with Progressive: Varies a lot based on the driver’s history information.

Pros of Progressive

  • The rideshare coverage also provides rental car reimbursement and roadside assistance.
  • For phase 2 and phase 3, you will get deductible coverage.
  • The company is the official partner of Lyft.

Cons of Progressive

  • The company provides full coverage only in phase 1.

Erie

Erie provides an option to add a rideshare policy onto your existing car insurance policy with a designation of “business use”. The company provides coverage for all three phases of the delivery period.

With an A+ from A.M.Best, the company has a solid reputation for financial stability. Even the J.D.Power score of the company is better than some of the industry leaders.

The estimated cost of adding rideshare coverage with Erie: The company calculates the cost based on the percentage of the existing personal policy. Generally, it is 30% on the existing policy but it can go lower up to 15% based on the profile of the driver.

Pros of Erie

  • It provides coverage for all the ridesharing options along with deductible coverages.
  • The personal car insurance policy of the company provides some extra perks that are generally paid with another company.
  • Strong claim satisfaction and customer satisfaction score.

Cons of Erie

  • The company is only available in 12 states of our country and DC.
  • To get a rideshare insurance quote a driver is required to get in touch with a local agent of the company.

State Farm

State Farm has become a leading choice for rideshare insurance recently because of its amazing coverage options. Along with providing coverage for all the phases from 1 to 3 for the delivery drivers the company also provides additional coverages like emergency roadside assistance, medical payments, and rental car reimbursement.

The company also offers to pay the gap between your deductible and the employer company’s deductible to support the drivers.

The estimated cost of adding rideshare coverage with State Farm: Just like Erie, State Farm also provides the cost of rideshare policy as per the personal policy. On average, the company provides rideshare coverage costs based on 15-20% of the existing policy cost.

Pros of State Farm

  • Deals with the drivers in case of accident claims instead of the ridesharing company.
  • Provides the option to extend your existing policy and add new add-ons along with rideshare.
  • Allows the drivers to select a lower deductible option for rideshare coverage.

Cons of State Farm

  • Can be a bit expensive for some drivers.

How much does rideshare insurance cost?

Just like any other car insurance policy; the cost of a rideshare car insurance depends on a lot of factors. As a result, it can vary from company to company and driver to driver. There are generally two methods to calculate the cost of rideshare insurance:

  1. Fixed monthly or yearly cost
    At fixed cost, you will have to get a predetermined amount to buy the additional coverage. Your insurance company will check your profile and will decide this amount. This amount will then be added to your existing policy cost.
    The advantage of this method is; if your policy cost increases next year then there are chances that your rideshare cost might remain the same.
  2. Percentage of your existing car insurance policy
    In this method, your insurance company will decide a fixed percentage of your existing policy as the cost of rideshare insurance. For example, State Farm generally calculates the cost of rideshare coverage as 20% of the existing policy amount.
    The disadvantage of this method is; if the policy amount increases then the rideshare coverage amount will also increase automatically.

How to buy rideshare insurance?

If you want to buy rideshare insurance then the first step will be to ask your existing insurance carrier. Because the entire next process depends on the fact if your insurance company provides this coverage or not. Below we have divided the process accordingly:

If your existing company provides this coverage:

  1. Inform your company about your plan to buy this additional coverage and ask for a quotation.
  2. Check if any type of discount is applicable as per your profile with this coverage.
  3. Pay for the coverage and relax.

If your existing company does not provide rideshare coverage:

  1. Inform your existing company that you will have to cancel your policy as you need this coverage.
  2. Search for top rideshare insurance companies in your city and ask for quotations. Or else you can get a quotation from a company like RateForce; we will provide a list of top rideshare companies along with their quotations.
  3. Make sure you are asking for a quotation of standard comprehensive or collision insurance along with a rideshare add-on.
  4. Check the discount types and coverage options and finalize any one company.
  5. Pay for the policy and relax.

If you still have doubts about the process of buying this coverage then you can ask our experts anytime.

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What happens if you have an accident while driving for Uber, Lyft, or another app?

The entire process of filing a claim and getting claim money depends on a lot of factors but the most important factor is;

If you get into an accident during phase 2 or 3 then your TNC company (your employer) will cover all the expenses of your treatment and repair of your vehicle. Moreover; based on the company’s policy you might get other coverages as well like rental reimbursement.

If you get into an accident at phase 0 or phase 1 then you will have to rely on your personal car insurance policy and rideshare coverage add-on. You will get coverage for bodily injury, property damage, and in some cases lost wages and rental reimbursement.

How to report an accident and file a claim?

The process of reporting an accident varies from company to company as some companies provide online filing options and others ask their customers to call and inform them directly.

The first and most important step here is to inform the police about it. Depending on the laws of your rideshare company you would have any proof of employment. This proof of employment will be required at the time of investigation and inquiry.

After that, you will have to inform your insurance company. Despite the fact whether your employer company provides coverage or not you are legally and ethically bound to inform them about the accident. If your TNC provides coverage and you are eligible then the representatives of the company will take care of the next steps for the claim filing. If your TNC does not provide any coverage then you will have to inform your personal car insurance company and file the claim directly.

FAQs about Rideshare Insurance

  • How much is rideshare insurance?

    The cost to add rideshare insurance to your policy depends on a lot of factors and the cost varies from company to company. Overall we can say the average cost for cheap rideshare insurance coverage will be $30 approx per year.

  • Which insurance companies cover rideshare?

    There are some companies that provide rideshare as an add-on while there are some companies that simply deny covering this group. Some of the most popular car insurance companies which you can rely on are USAA, Progressive, Erie, and Allstate.

  • What does the best rideshare insurance cover?

    Rideshare coverage provides bodily injury liability and property damage liability to the drivers. But the claims are limited as per the policy values.

  • How to get rideshare insurance?

    The best way to get rideshare insurance is by asking your existing company to provide this coverage as an add-on policy to your existing insurance. If your existing insurance company denies it then you will have to change the company for your standard insurance as well. Because most car insurance companies sell rideshare insurance as an add-on policy. As a result, you can not buy this separately.

  • What insurance covers rideshare?

    Rideshare insurance coverage is a separate add-on policy that covers rideshare.

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Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.

Randy Luton is the Founder and CEO of RateForce. He is passionate about InsurTech services and has in-depth knowledge about the auto insurance sector of the USA.