At a time when rideshare options have flooded the market, many are embracing the idea of taking it up as a side hustle. After all, it only takes an inspection and a few copies of documents to get a person started.
So, hopped on to the ridesharing bandwagon already? If the answer is yes, there’s a bunch of stuff you need to know - maintenance protocols, rating system, pricing, and most importantly, insurance.
A rideshare driver makes $18.15 per hour on average, and even the slightest of the accidents could devour months of savings.
We know your pre-ride checklist is already long, but we can’t stress enough about the importance of getting rideshare insurance. Read on to find out more.
Why Buy Separate Rideshare Insurance?
The moment you start using the rideshare option, the car turns into a commercial vehicle instead of a personal one. Hence, you’ll need something more than regular auto insurance to protect you from excessive bills.
A rideshare insurance policy falls between personal auto insurance and a commercial one.
If you hide your ridesharing pursuits from your insurer, you might soon become ineligible to get coverage from them. In fact, most insurance companies ask whether you’re a rideshare driver as a part of their standard claims questionnaire.
Insurance Information Institute's Loretta Worters says that not having a rideshare endorsement is a “financially devastating" move for drivers.
Service providers have started offering rideshare insurance products, but they aren’t popular. It is because many drivers don’t know the significance of having one.
There’s a widespread misconception that ridesharing platforms offer end-to-end coverage. The fact is they do not provide collision insurance unless you’re actually on a trip. For instance, you won’t be able to make claims for rear-ending someone or accidentally bumping into a tree.
How Do These Insurances Work?
Big platforms offer coverage and protection to everyone using their service. In contrast, most small companies expect drivers to get their own rideshare insurance. Like regular insurance that imposes different conditions, even rideshare insurance has many caveats.
There are three phases when your rideshare option is on, and coverage depends on various factors:
Available (Period 1): In this stage, you are actively looking for a passenger to join you.
You are on the fence during such moments - it is neither a personal ride or a commercial one.
If your insurance provider doesn’t cover third-party liabilities, the ridesharing company foots the bill in such cases. Besides this, the likes of Uber and Lyft offer an injury coverage of $100K and property damage coverage of $25K per accident.
En route (Period 2): In this stage, you accept a ride request and head towards the passenger’s pick-up point.
By this point, you become eligible for a third-party claim worth $1 million as a Uber or Lyft driver. In case you are underinsured, injury claims and survivor benefits are taken care of by the company.
On the trip (Period 3): In this stage, you have picked up the passenger and are headed to the destination.
The generous coverage continues from Period 2 here. But Lyft and Uber’s deductibles of $1000 and $2500 respectively have become a talking point in the rideshare community.
Who Provides These Insurances?
There are many rideshare offerings from popular insurance companies. The list includes Geico, Allstate, Progressive, Farmers, State Farm, USAA, and Liberty Mutual.
While the options are plenty, there seems to be a problem of prevalence and recognition. Getting hold of such a policy is easy in some states, and on the other hand, many don’t have a state insurance policy for rideshare drivers.
Policy changes like California’s Proposition 22 have paved the way for uniform insurance regulations in the country. Until then, it is imperative to find the closest alternative to rideshare insurance.
What are the Costs and Claims Procedure?
There are three major offerings in the market, and the costs might vary according to your policy type -
Additional Coverage: For some extra premium, your insurer may offer coverage for the situations left out by the rideshare platform.
Personal Coverage Extension: Only specific instances and particular stages of the trip are covered in this add-on.
Hybrid Policy: It is a comprehensive policy that offers the best of both worlds. With this, you won’t have to worry about whether the rideshare option was switched on or not.
Rideshare insurance could cost $15-$20 over your regular monthly premium. If you are willing to compromise on the coverage, it could cost you as low as $20 for an entire year.
Talk to your insurer and confirm if the policy fills the gaps left by your rideshare platform.
Compare policies and calculate premiums using a rideshare insurance cost estimator. Ensure that the amount you pay is less than that of a commercial policy.
That said, do not underestimate the need for rideshare insurance at any cost. You’ll be spending a lot of time on the roads and be more prone to the dangers than a regular car-owner.
Want to try ridesharing in the vicinity of Tennessee? Check out this rideshare blog post to get five reasons to join the Drover Rideshare family today.
