Freelancers, Insurance, On Your Own, Uber

Insurance Options for On-Demand Drivers

Ridesharing is a phenomenon that is popping up in new cities every day. And to keep up with the demand, more and more workers are signing up to be drivers for on-demand car sharing and delivery companies such as Uber, Lyft and InstantCart. You can’t be work for one of these companies, however, unless you know your insurance options.

Independent contractors for such companies can make a considerable amount of income, even supplementing full time salaries. However, one of the primary concerns is insurance. Drivers use personal cars and are not considered employees of the companies. Therefore, the protection and liability coverage can be a bit confusing. If you’re are a on-demand driver or considering becoming one, read this guide first and understand what you are and are not protected against:

Is insurance provided by the company and if so, what kind?

In short, the answer to this question is yes. But it does get complicated. Drivers are protected in some ways if using their car for the purposes of transporting clients but the amount and level of insurance depends on what they are doing. The categories or stages typically consist of:

  • Logged into the app and waiting for pick-up requests
  • On way to picking up a passenger/client
  • Transporting a passenger/client to destination

The major ridesharing companies offer some level of protection in each of these stages but they vary. Let’s take a closer look by company:

  • UberX:
    • Logged into the app and waiting for pick-up requests: Contingent liability coverage (50/100/25 limits); covers losses not covered by driver’s personal policy
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial Liability insurance ($1 million limit)
      • Uninsured bodily injury ($1 million limit)
      • Contingent comprehensive and collision coverage ($1000 deductible)
      • Minimum amount of personal injury protection coverage (if required by law)
  • Lyft:
    • Logged into the app and waiting for pick-up requests: Contingent liability coverage (50/100/25 limits); covers losses not covered by driver’s personal policy
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial liability insurance ($1 million limit)
      • Uninsured bodily injury ($1 million limit)
      • Contingent comprehensive and collision coverage ($50,000 limit and $2,500 deductible).
  • Sidecar:
    • Logged into the app and waiting for pick-up requests: Collision insurance ($50,000 limit and $500 deductible); covers losses not covered by driver’s personal policy. Note: Policy may differ in California, Washington State, and Chicago
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial liability insurance ($1 million limit)
      • Collision insurance ($50,000 limit and $500 deductible)
      • Policy may vary in Washington state and Chicago

Keep in mind that when your car is used for personal driving, there is no insurance provided under all companies.

What insurance should I purchase myself?

As a driver, you should have auto insurance whether or not you are using it for business. Some ridesharing companies say that a personal insurance policy along with their supplementary coverage is enough coverage. However, this area is still very gray, particularly when you are using your car for business. Consider these policies:

  • Commercial car insurance: Many states require ridesharing drivers to purchase commercial car insurance so it’s important to understand the rules and regulations of your state. This insurance is typically required for taxis and many states consider rideshares to be under the same category. You do need a commercial driver’s license to purchase commercial car insurance.
  • Policies targeted toward ridesharing drivers: With the rise in on-demand ridesharing, many insurance companies are now experimenting with policies specially geared toward these drivers. Ask your insurance company about their policies.

What else do I need to know to stay protected?

If you are a driver for a ridesharing company, it’s important to understand your rights and how your are protected. Drivers are considered independent contractors, not employees, and so protection is typically limited. Depending on your budget, purchase an insurance policy that can cover you as much as policy. Rules and regulations for ridesharing companies and drivers are constantly shifting. It’s important to stay up to date to keep your protected in any situation.

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