If you drive for a ridesharing firm like Uber or Lyft, you’re probably well aware that a personal auto insurance policy does not normally cover “business usage” of your vehicle. In other words, if you are in a car accident while on the job, you may have to pay for things such as vehicle repairs or an injured person’s medical bills out of pocket.
State law requires most ride-sharing firms to offer insurance to their drivers. However, if you use your car for both personal and commercial reasons, you should consider purchasing extra coverage to safeguard it. Here are some things to remember regarding ridesharing insurance, often known as ride-hailing insurance, and the sorts of circumstances it may assist cover.
How to Obtain Ridesharing Insurance
Some insurers provide a ride-hailing insurance endorsement that may be added to your current personal auto insurance policy. If you work for a ridesharing firm (also known as a transportation network company, or TNC), this endorsement may assist address gaps between the TNC’s commercial policy and your personal vehicle insurance policy.
A comprehensive ridesharing insurance policy, which incorporates personal and company coverage into a single car policy, is another alternative.
Insurance costs, coverage types, and policy limitations may vary across insurers, and available coverage may range by state. Your insurance agent can inform you of the possibilities accessible in your region.
The coverage gap in ridesharing: Business vs. personal usage
According to the National Association of Insurance Commissioners (NAIC), major TNCs provide limited commercial insurance to their drivers who use their own vehicles for TNC operations. When the driver is in way to pick up a passenger or has a passenger in the car, this is considered business usage.
However, since personal automobile insurance normally excludes any commercial usage, the driver may not be protected by either policy if he is available for hire but has not yet accepted a trip request, according to the NAIC. A ridesharing endorsement might assist with filling that coverage gap. It extends some coverages from your own insurance so that they apply when you’re waiting for a ride request.
So, if an accident happens while you’re waiting to be employed, the ridesharing endorsement may help you avoid paying for associated charges out of pocket. However, keep in mind that if you do not have collision coverage on your own insurance, you will not have it under the endorsement. If you have an accident while waiting for a ride request, you will still be responsible for the entire cost of damages to your own car. Similarly, if you do not have comprehensive coverage on your own insurance, you will not have comprehensive coverage under the ridesharing endorsement.
Deductible gap in TNC coverage
A ridesharing endorsement may also assist you decrease your out-of-pocket expenditures when it comes to paying the high deductible on a TNC insurance. Though some TNCs offer commercial insurance for drivers, if you are involved in an accident while driving for the firm, you will most likely be required to pay the TNC policy’s deductible.
A deductible is the amount of money you pay out of pocket for a covered claim. There are different deductibles for collision and comprehensive coverage. You may be allowed to choose your collision and comprehensive deductibles on a personal vehicle insurance policy, such as $500 each.
When you drive for a TNC under the protection of its business insurance policy, however, you may be required to pay higher deductibles for collision and comprehensive coverage, such as $1,000 or $2,500. If you are on your way to pick up a passenger or have a passenger in the vehicle and you are involved in a covered accident, you must pay the TNC’s deductible out of pocket before commercial insurance benefits kick in to help repair your automobile.
In this case, a ridesharing insurance endorsement may assist pay the difference between your personal vehicle policy’s deductible and the TNC policy’s deductible. As an example, if your collision policy deductible is $500 and the TNC’s collision coverage deductible is $1,000, the ridesharing endorsement may assist in covering the $500 difference.
If you want to become a rideshare driver for a company like Uber or Lyft, the Insurance Information Institute recommends that you review the coverage types, limitations, and deductibles with your TNC.
Once you’ve determined what coverage is available via your ride-hailing provider, you may speak with your agent about adding a rideshare insurance endorsement to fill up any possible coverage gaps.
What is the cost of ridesharing insurance?
The cost of ridesharing insurance is mostly determined by the kind of coverage purchased. A ridesharing endorsement, for example, may be less expensive than a separate rideshare insurance policy that offers coverage distinct from your normal auto insurance policy.
As with most insurance policies, the greater your limitations, the more expensive insurance will be. When you add a ridesharing endorsement to your vehicle insurance policy, your rideshare coverage limit is usually the same as the one you select for your personal car insurance policy. So, if your standard policy has a $100,000 liability limit, $100,000 is the maximum your policy will pay toward a covered rideshare insurance claim. If you want to purchase a second ridesharing insurance policy, you will almost certainly need to establish limitations for that coverage.
