Understanding the Scope of Rideshare Insurance

Understanding the Scope of Rideshare Insurance

June 21, 2023

As a modern and rapidly evolving industry, ridesharing has seen astronomical growth in the recent past. Owing to its unprecedented development and unique business model, insurance providers and governmental authorities have been forced to adapt swiftly to its realities.

Those who drive for companies like Lyft, Uber or other similar enterprises may assume that they’re comprehensively protected in the event of an accident occurring during a rideshare session. They would believe so because they’re shielded by both their personal car insurance and the insurance policy of the rideshare company. However, the reality is somewhat more complex.

To ensure robust protection as a rideshare driver, it’s critical to understand when your coverage is applicable, where the coverage gaps exist, and how best to bridge them. Rideshare insurance, now offered in various forms by many conventional auto insurance providers, is a product designed to help drivers maintain coverage throughout all phases of their rideshare work.

Understanding Rideshare Insurance

Most individuals possess private auto insurance for their personal vehicles, which typically covers all personal uses of the car. However, when the vehicle is occasionally used for commercial purposes, such as rideshare services, conventional insurance often falls short of covering the driver or their property during such use.

Previously, the only viable solution for drivers might have been to purchase a comprehensive commercial auto insurance policy to cover their ridesharing activities. This, however, can be a costly proposition, particularly for someone relying on rideshare services like Uber or Lyft for their livelihood. The insurance industry’s response to this dilemma is rideshare insurance or ride-hailing insurance.

Ride-hailing insurance is a policy that drivers can acquire to protect those aspects of their work not covered by either their personal policy or their employer’s insurance. Drivers generally have the choice to purchase such a policy either separately or as an add-on (known as a rideshare endorsement) to their existing personal auto policy.

Operational Dynamics of Rideshare Insurance

Rideshare services and insurance companies have segmented coverage periods into distinct categories. Each category represents a different phase of rideshare driving and is accompanied by differing insurance coverage options.

Period 0: Often referred to as the “Offline” period, this is when you’re not utilizing a ridesharing app and therefore not conducting commercial activity. During this period, your vehicle usage remains personal, and your private auto insurance remains operative.

Period 1: This period starts when you activate your ridesharing app, such as Uber or Lyft, and wait for a customer ride request. Typically, your personal auto insurance ceases to be operative at this point. Instead, you’re likely covered solely by the insurance provided by Uber or Lyft. This coverage is limited to liability, covering damages to other vehicles and passengers. Your personal policy, which includes comprehensive and collision coverage, no longer protects you or your car. However, during this period, you might be able to use a rideshare endorsement to extend your personal coverage.

Period 2: This phase begins when you have accepted a ride request via the app and are on your way to pick up your passenger. At this stage, you are exclusively covered by the ride-hailing company’s insurance, and neither your personal auto policy nor the rideshare add-on is in effect.

Period 3: The final phase, Period 3, commences when you have accepted a passenger and are en route to their destination. The insurance situation remains unchanged from Period 2.

Once your passenger has disembarked, if you leave your app active, you revert to Period 1. If you shut down the app, you move back to Period 0, and your personal auto policy comes into effect once again.

Insurance Coverage Provided by Uber and Lyft

During Periods 2 and 3, both Uber and Lyft offer Contingent Collision and Comprehensive coverage. This means that the provision of collision and comprehensive insurance depends on whether you already maintain this type of coverage under your personal policy. If you do not maintain this level of coverage apart from ridesharing, neither Uber nor Lyft will extend it to you. The minimum coverage each company provides is 50/100/25, which stands for:

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

If state-mandated limits surpass the minimums set by Uber or Lyft, these companies will enhance their coverage amounts to match. However, they won’t reduce their limits if state requirements are below the Uber or Lyft thresholds. Moreover, during Periods 2 and 3, Uber and Lyft provide $1 million in liability coverage and an additional $1 million in UIM/UM coverage.

The Rationale Behind Rideshare Insurance

Ride-hailing insurance and rideshare endorsements are designed to guarantee constant coverage, regardless of transitioning between personal and commercial uses of your vehicle. Without this insurance, you could potentially be liable for hefty out-of-pocket expenses for injuries or vehicle damage if you’re involved in an accident during Period 1, when your coverage is minimal.

Bridging the TNC Deductible Gap

Rideshare companies like Uber and Lyft, also known as Transportation Network Companies (TNCs), have their own deductibles that must be fulfilled before their commercial insurance becomes operative to cover costs in an accident. The deductibles set by Uber and Lyft are generally high compared to the average deductibles of most personal auto policies.

Uber’s deductible for collision and comprehensive claims is $1,000, while Lyft sets this deductible at $2,500.

It is feasible to obtain either a standalone ride-hailing insurance policy or, more commonly, an endorsement that can help bridge these higher deductibles. For instance, if your personal auto insurance carries a $500 deductible, your rideshare endorsement may cover the difference between the $500 and any additional amount stipulated by the TNC. Consequently, even if Uber requires a $1,000 deductible, you’ll only pay $500 if your rideshare endorsement is operative at the time of the accident.

Cost Considerations for Rideshare Insurance

Accurately estimating an average price for ride-hailing insurance is challenging. The cost varies considerably depending on the state where you drive and the rideshare company employing you. The premium rates on your personal policy are influenced by several factors, such as your driving record, claims history, the age of your vehicle, and so forth.

Whether you choose a completely separate policy to cover ridesharing or simply add an endorsement also makes a difference. If your insurance company provides endorsement policies, that’s likely to be your most cost-effective option.

Acquiring Ride-Hailing Insurance

Obtaining ride-hailing insurance can be as straightforward as visiting your current auto insurance provider’s website and filling out the necessary forms on their platform or online portal. Alternatively, some insurance companies might require you to call and converse with an agent first.

When speaking with an agent, be explicit about your engagement in rideshare work. They should be able to provide you with a quote based on your personal history and location. It might be worthwhile to compare quotes from different providers in your area.

Rideshare Insurance Requirements in California

While most states do not necessitate ride-hailing insurance, California law stipulates that TNC drivers must be insured at all times while operating a ridesharing app. To comply with this law, drivers may need to acquire an add-on, a separate ride-hailing policy, or a commercial policy. In some instances, the coverage provided by Uber or Lyft may suffice to meet California’s standards. However, drivers will not enjoy as many benefits with Uber’s or Lyft’s liability insurance as they would with additional coverage.

Here are the minimum requirements for the different periods:

Period 0 Minimum Requirements

  • $15,000 bodily injury coverage per person
  • $30,000 bodily injury coverage per accident
  • $5,000 property damage coverage per accident

Period 1 Minimum Requirements

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

Periods 2 and 3 Minimum Requirements

  • TNC must provide at least $1 million in liability insurance

If you’re uncertain whether your employer-provided coverage meets California’s standards, it’s advisable to contact the TNC in question and inquire whether you’ll need to buy additional insurance.

Steps to Take Following a Rideshare Accident

If an accident leads to injury, your priority should be seeking medical help, such as dialing 911. Even in the absence of apparent medical emergencies, your initial step should be notifying the police. If the TNC you work for provides guidance on handling such incidents, consider adhering to their recommended procedures.

Besides ensuring human life and safety, which is always paramount, notifying the local authorities aids in creating records that may be instrumental when filing an insurance claim. Make sure to obtain a copy of the police report and note down vital details like names, license plate numbers, times, and any other information you may need to recall later.

Subsequently, you should promptly hire an attorney experienced in dealing with rideshare claims. The sooner you get an attorney, the quicker they can start working on potential claims. In California, there’s a statute of limitations within which you must file your claims following a ridesharing accident. If you miss this window, you risk losing your entitlement to full compensation or any compensation at all.

Why is an Experienced Attorney Necessary After a Rideshare Accident?

Although Uber and Lyft carry insurance that should provide considerable benefits in case of an accident, securing a claim approval can be a challenging endeavor. That’s because these large corporations employ expert legal teams whose mandate is to minimize your claim or avoid a settlement altogether.

However, there’s a silver lining: the overlapping insurance policies in ridesharing accidents afford you multiple opportunities to file a claim and potentially receive substantial compensation. To effectively combat any resistance from Uber or Lyft, you need expert legal representation on your side. The right legal team will be well-versed in ridesharing accident-related matters and will assist you in swiftly obtaining all the financial benefits to which you’re entitled.

In light of the above, it’s clear why enlisting the expertise of Avian Law Group is vital for rideshare drivers. Our skilled team stands ready to help you navigate the intricate web of rideshare insurance and legal issues, ensuring that your rights are upheld, and you receive the compensation you deserve.

Posted by

Laura Delgado

Laura Delgado is an accomplished digital marketing specialist at Avian Law Group. She brings with her a wealth of experience and a strong background in criminal justice and psychology, which has proven to be invaluable in her role at the firm. Laura’s exceptional leadership qualities and her ability to excel under pressure enable her to adapt to any situation and contribute significantly to the team.

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