June 15, 2020
With the COVID-19 crisis, people are looking for ways to earn extra cash. Delivering food for a restaurant or being a Rideshare driver are some options but there are things that you need to know beforehand. Most auto insurance policies exclude vehicles used for hire unless the policy is endorsed for ride sharing or for deliveries, which can be costly.
Want to Drive for a Rideshare? Better Check Your Coverage.

To make ends meet, or to build up their nest eggs, many people have turned to moonlighting as Uber or Lyft drivers.

However, if you are planning to make some spending money, you need to understand that doing so could invalidate your personal auto policy.

Uber and Lyft are so-called "ride-sharing" mobile apps that connect passengers to drivers. With the phone app, passengers can hail a driver to their exact location, track the driver using their phone's GPS and pay for the ride with a credit card. Drivers keep the app on when they are waiting for customers or driving to fetch a passenger.

There are typically two levels of insurance involved in these ride-sharing arrangements. The driver carries their own vehicular insurance, while the ride-sharing company also has its own liability policy in place. Here's what you need to know:
Your policy bars commercial driving.

Personal auto policies have an exclusion for "driving-for-hire" - or commercial driving. This exclusion means that a driver's standard personal auto insurance would not likely cover them while the ride-sharing application is turned on, regardless of if they haven't accepted a ride request and have no passengers in the vehicle.

Check your policy or call us and we can find out the extent of any exclusions in your coverage.
The coverage gap.

Some states require ride-sharing companies to carry at least $1 million per incident excess liability coverage. The policies are designed to deal with liability claims that a driver's insurance doesn't cover.

Ride-sharing companies' insurance only covers third parties (injuries to others that an Uber or Lyft driver may hit and any property damage the third party sustained).

However, physical damage to your car or injuries you sustain would have to be borne by you if you only have a personal auto policy, since the ride-sharing company's policy would not cover you.

There is another risk in the coverage gap: The ride-sharing operator's insurance policy will not cover you if are you hit by an uninsured driver. Again, you would have to pay for that out of pocket if all you have is a personal auto policy.
How the insurance works*
  • When the Uber app is off, you are covered by your own personal policy.
  • When you have the Uber app turned on, a low level of liability insurance becomes active.
  • When a trip is accepted, a higher level of coverage takes effect and remains active until the passenger exits the vehicle.
Tip: Questions to ask your Rideshare company*
  • How much liability insurance is provided while I'm transporting a passenger? Do I need more?
  • Will I be charged a deductible and, if so, what is it?
  • Is the commercial liability insurance coverage my main source of coverage, or is it contingent on denial by my personal auto policy?
  • How do I report a claim?
  • At what times am I covered by the Rideshare company's policy?
* Source: The National Association of Insurance Commissioners
What you can do.

Insurers have responded to the ride-sharing trend.
There are two ways you can go to ensure coverage for yourself and your vehicle:
  1. Buy a commercial auto policy that is valid at all times.
  2. Buy a policy that specifically covers you and your vehicle when the ride-sharing app is on.

With rideshare becoming more popular the state laws and insurance contracts are always changing. Contact ACBI via email or at 203-259-7580 with questions on your coverage.