What Insurance Do I Need for My Rideshare Gig?

Many people are looking for a side hustle to earn extra money during these tough economic times. Ridesharing can be lucrative and there’s even potential to develop this into a full time income. The owner can use their vehicle when they want and then make extra money around their existing commitments. But, before you rush to sign up for a rideshare platform, you need to fully understand the insurance implications. 

The Difference Between Personal and Commercial Insurance

In most states, car insurance is a legal requirement, it offers a degree of financial protection if you cause an accident. For this reason, personal car insurance is a must, but it will offer no protections if you are transporting people for money. In that scenario, you are engaged in business and an accident at that time can lead to a host of legal problems. Certain rideshare platforms such as Uber and Lyft do offer some limited commercial car insurance policies for their drivers. This offers cover for both you and your vehicle if you’re working for the platform. That said, this cover may be insufficient for your needs because there are coverage gaps that have been identified. 

Understanding Commercial Rideshare Car Insurance

Due to the popularity of rideshare platforms to make fast money, there are now dedicated rideshare insurance products available from a number of providers. This can provide a measure of protection to skip paying a costly bill in the event of a rideshare accident. Some drivers add rideshare insurance to their existing car insurance policy because it’s easier to keep track of and there may be a discount. 

The car insurance plans offered by rideshare platforms can vary a great deal and most don’t cover the driver for the entire duration of the trip. A typical insurance policy will cover picking up the fare, the journey and dropping off the passenger. This sounds fine, but there will inevitably be a waiting period before your next passenger. This isn’t covered under the rideshare or your personal car insurance policy. After all, you are working, but you have not been booked for the next rideshare. 

To put this into perspective it’s easier to think of rideshare insurance services as three distinct periods:

• Offline: This is when the driver isn’t logged into the rideshare app and the vehicle is considered to be in personal use. At this time, the driver is not covered by their rideshare commercial insurance plan. The driver has by default moved into a mode that’s covered by their personal auto insurance plan. 

• Waiting for Request: The driver is logged in, but no ride request has been received and they are technically working. At this juncture, the personal car insurance policy does not apply, but this is equally true for the rideshare car insurance too. This creates a critical gap in coverage that most people would expect to be covered by their commercial rideshare insurance.

• Driving and On Route: Once the rideshare request has been received and you’re on the way to the pickup your commercial car insurance applies. This remains in effect for the duration of the ride until the passenger arrives at their destination. 

Some rideshare platforms offer insurance with lower coverage limits that may offer insufficient cover for the driver and their vehicle. For this reason many drivers prefer a separate and more comprehensive rideshare insurance policy. Extra auto insurance is not a requirement to sign up with a rideshare platform and receive gigs. But, if the vehicle is off the road the extra income is lost and you don’t want to get caught out with medical bills and certain other expenses. With private rideshare insurance you can be assured that you’re covered if the worst happens.

How to Shop for Commercial Rideshare Insurance

Shopping for the best rideshare insurance may seem like a daunting prospect, but it’s very similar to the search you did for personal auto insurance:

• Comparison Shop: It’s really easy to get online quotes these days, there’s no need to wait for hours on the phone to get your quote. All you need to provide is some basic information about you and your vehicle and you’re good to go. 

• Check the Coverage Area: Certain insurers can offer rideshare insurance anywhere and others may be restricted to specific states. Before you commit to purchasing rideshare insurance make sure that it covers where you want to work. If you plan to transport a passenger across a state line it’s imperative that both states are included in your rideshare insurance. 

• Comparing Add Ons: A rideshare add on to your existing car insurance policy may seem like the simplest solution. But, it may not be the most cost-effective option and you may be able to save money with a separate rideshare policy. The level of commercial insurance coverage may also be better with a dedicated product. 

Premium Confirmation: if the rideshare insurance coverage is an add on to your existing policy you need to understand how it affects your premium. It may be less competitive with rideshare coverage in which case you may want a dedicated rideshare insurance product. 

• Verify the Coverage: Every insurance will offer differing coverage levels and you need to make sure that your coverage needs are met. Remember that if you’ve got outstanding finance on your vehicle then the lender may require you to specific minimum coverage. Those that own their vehicle outright should consider the potential losses and find a level of insurance coverage that they can live with.

• Customer Reviews: Check the reviews for a potential insurer to see what the customer service is like and whether the prices for the products are fair. If you do need to file a claim at some point, you won’t want to deal with a lot of hassle and stress. If any red flags arise simply move on to a different insurer until you’re happy.

In Conclusion

Ridesharing platforms are a great way to make some extra money. But, the in-house insurance that they offer may not be sufficient to meet all your needs. Commercial rideshare insurance can be more expensive, but it offers much more protection.