What is Rideshare Insurance?
Before driving for a Transportation Network Company (TNC), such as Uber or Lyft, it’s important to understand your insurance coverage. A personal auto insurance policy typically doesn’t cover “business use” of your vehicle, and the insurance coverage from a TNC may be inadequate. Therefore, to fill the gap in coverage, many auto insurers now offer a rideshare endorsement. You can avoid potential out-of-pocket expenses if you make sure this coverage is available. In fact, most insurers require you to add the rideshare endorsement to your auto policy if you’re driving for a TNC. If you fail to do so, the insurance company will most likely deny coverage while you’re on duty. This actually happened to one of our clients. Your policy may also be cancelled or non-renewed.
The Gap in Insurance
It’s not enough to rely on the insurance coverage provided by a TNC. Their coverage depends on what “period” an accident occurs. These periods are similar to both Uber and Lyft, which are the two most popular rideshare companies.
- Period 1: The app is on and you’re waiting for a request.
- Period 2: You’ve accepted the request and are on the way to pick up a passenger (or an order).
- Period 3: Your passenger or order are in the vehicle.
The largest gap in insurance occurs during Period 1 while waiting for a request. If you accidentally cause bodily injuries or property damage to someone else, the liability limits of the TNC insurance could be lower than the limits on your own auto policy. Therefore, you may be held responsible for any damages that exceed the coverage. As for physical damage coverage for your vehicle, it isn’t even available during this period. For example, if your vehicle is struck by an uninsured motorist while waiting for a request, you’d be stuck paying for the damages yourself.
During Periods 2 and 3, the physical damage coverage from a TNC policy is “contingent comprehensive and collision coverage”. That means they will not cover your damages unless you also have comprehensive and collision coverage on your own auto policy. Door Dash won’t cover your damages at all. This snippet is from their website:
You will also be subject to their high deductibles. Having the rideshare endorsement, most insurance companies will reimburse you for the difference between the TNC’s deductible and the deductible on your personal policy.
For more details about the insurance coverage provided by a TNC, it’s a good idea to visit their websites. Here are links to their insurance information:
Key Takeaways
- You must inform your insurance carrier before you begin driving for a TNC, or you may be denied coverage, cancelled, or non-renewed.
- You have limited coverage while you are signed into the app waiting for a request.
- Adding the rideshare endorsement to your personal auto policy eliminates coverage gaps.
If you have any questions, or are in need of rideshare insurance, make sure to give us a call.