Driving for a rideshare company like Uber or Lyft can be a great business opportunity. As independent contractors, TNC drivers work when they want and where they want. This convenience for drivers and customers has made Uber and Lyft very popular and successful. However, drivers should understand the exclusions, conditions, and limitations of auto insurance for rideshare drivers and what options are available to them.
Rideshare Periods or Driver Modes
We should start by discussing the four periods or driver modes recognized by Uber, Lyft, and other rideshare companies:
- Offline, meaning you are driving your vehicle for personal use only and are not logged into a rideshare platform.
- Period 1, when you are logged into a rideshare application and are waiting for a pickup request.
- Period 2, when you have accepted a request and are en-route to pick up the customer.
- Period 3, when a rideshare passenger is in your vehicle and being driven to their destination.
Rideshare Insurance Coverage
The coverage offered by Uber and Lyft is very similar in scope and limits during period 1, 2 and 3. No coverage is provided when drivers are offline. During period 1 both Uber and Lyft provide contingent coverage (applies only if your personal auto insurance does not) of $50,000 per personal and $100,000 per accident of bodily injury coverage and $25,000 of property damage coverage. Note that neither Uber nor Lyft provides any physical damage coverage (comprehensive and collision) during period 1.
During period 2 and period 3 both Uber and Lyft provide $1M of liability coverage and $1M of uninsured or underinsured motorist coverage. Contingent physical damage is also provided for your vehicle. Uber provides this coverage with a $1,000 deductible. Lyft provides physical damage with a $50,000 coverage limit per accident and a $2,500 deductible.
Auto Insurance for Rideshare Drivers
Most personal auto insurance policies have adopted exclusions for rideshare services that applies from period 1 thru period 3. Uber and Lyft drivers should consider purchasing an endorsement that extends coverage during period 1 such as those provided by Acuity and Mercury. The scope of these endorsements does vary between insurance companies. For example, Acuity provides coverage only during period 1 and no coverage during period 2 and 3. Mercury provides coverage during period 1 and excess coverage during period 2 and 3.