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5 Things Uber Drivers Should Know About Car Insurance Coverage

The U.S. rideshare market is booming as more consumers grow accustomed to using an Uber or Lyft for a variety of tasks, but with this industry expansion comes new state regulations and auto insurance obligations for rideshare drivers.

It's wise for current and potential drivers to understand these coverage realities before they get behind the wheel.

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Some auto insurance carriers are beginning to offer a Ridesharing Endorsement (essentially, adding rideshare coverage to a personal policy) to their personal auto insurance policies. These policies are designed specifically for Uber and Lyft drivers.

Right now, there is a limited roll out with State Farm, Farmers and USAA offering such packages.

It's becoming common for Uber drivers to hide their status as an Uber driver from their auto insurance carrier. That might work for a while, but should you ever find yourself needing to file a claim, your insurance carrier may deny it and cancel the policy for your lack of disclosure.

“I did change my auto insurance before I started driving for Uber, albeit partially for price,” says Teajai Kimsey, a rideshare driver from Wichita, Kansas. “And once I started driving, I did check [with his insurance company] to make sure I wouldn’t be dropped. They assured me I was good to go.”

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But there actually were some new auto insurance adjustments Kimsey still had to make.

“In Kansas, our legislation requires Uber [the Sunflower State doesn’t offer Lyft] to cover us from the time we get the ping for a ride to the time we drop off the passenger,” he adds. “In other states, Uber is only required to cover when your passenger is in the car. Consequently, in those states insurance companies like Travelers or Farmers have a 'gap' policy, available to drivers for an additional fee.”

What rideshare drivers should know about car insurance

As for specific auto insurance needs for ridesharing drivers, the watchword is caution -– know in advance what you need before signing on with Uber, Lyft or any other ridesharing company.

Here are five things to know about auto insurance for rideshare drivers:

1. Personal insurance coverage probably excluded

“Drivers need to understand that their personal policy will not cover them as a rideshare driver,” says Harry Campbell, founder of The Rideshare Guy Blog & Podcast, in Newport Beach, California.

Uber and Lyft do provide commercial insurance when on a trip or en route to a passenger, but Campbell says when you're waiting (or driving around looking) for a ping request, you receive no collision coverage and the liability limits from Uber and Lyft are much lower.

2. Rideshare insurance not available with every insurer

Drivers should check to see if their is rideshare insurance available in their state. The cost is often only 5 to 10 percent more than what they currently pay.

3. Close the insurance gaps

Uber and Lyft drivers need to purchase ridesharing coverage that will close coverage gaps, says William Hebert, director, regional sales development at Mercury Insurance in Orange County, California.

“In particular, focus on the gaps that may exist during the period during the time the driver turns their ride-hailing app on and is available for a trip,” he says.

4. You are responsible for your own auto insurance

Hebert says that, as required by law in most states, liability coverage must be maintained by rideshare drivers.

“In addition to liability coverage, most transportation networking company drivers would want to maintain coverage that would protect their vehicle,” he adds. “In most cases, a ride-hailing company’s full commercial coverage doesn’t come into play until a ride has been accepted. During the time when a driver has logged into the company app, but not yet accepted a ride, limited coverage may apply.”

In order to close the coverage gaps during this portion of the drive cycle, Uber and Lyft drivers should be sure they have purchased auto insurance coverage that protects their own vehicle in the event of a loss, and potentially provides excess liability coverage, medical payments and uninsured motorist coverage, Hebert adds.

5. Talk to an insurance professional about discounts

To get a price break, drivers should consult with an insurance agent in order to ensure they are receiving all discounts for which they may qualify.

“Discounts can be provided based upon the driver’s safety record, but other discounts, including discounts for having multiple policies bundled with one company, can also be available,” he says.

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