Types of Auto Insurance Required for Uber Drivers

Ridesharing is an emerging industry that has expanded rapidly in recent years. A growing number of riders are using services such as Uber and Lyft to get to where they are going. The convenience of finding a ride and paying for it all on your smartphone gives both riders and drivers the assurance that the transaction is secure. However, insurance is one part of ridesharing where there is still a lot of confusion.

Of course, Uber and Lyft drivers are required to carry auto insurance. Before they are approved to drive, they must submit updated proof of insurance to the company. The challenge is that many rideshare drivers neglect to inform their own insurer of what they are doing. This could become a major problem if they are ever involved in an accident while the rideshare app is turned on.

How Does Insurance Work for Rideshare Drivers: Uber and Lyft offer a certain amount of liability coverage while you are driving for them. When your app is turned on and you are waiting for a trip, a low level of liability insurance is provided by the rideshare company. From the time a trip is accepted until the time you drop off a passenger, the amount of liability coverage increases. When your app is turned off, the rideshare company provides no coverage at all, and you are covered completely by your personal auto policy.

It is important to note that rideshare companies only provide liability coverage (while their app is on), which deals only with liability claims against you. They do not provide any coverage for your own vehicle. This could become a big problem if you have a loan on your vehicle that requires you to carry collision insurance. If you have not purchased added rideshare coverage, you may be exposing yourself to a major risk.

A Special License May be Required for Rideshare Drivers: In addition to insurance issues, another area to look into is licensing requirements. In some states, it is okay to drive for Uber or Lyft with a personal driver’s license. Others may require you to apply for a commercial license or some other type of license. For example, in Maryland, you are required to apply for a temporary Transportation Network Operator (TNO) license to conduct rideshare trips, but you may begin working while your application is pending. Check the licensing requirements in your state to determine what you need to get started.

Obtaining Rideshare Coverage: If you are considering driving for Uber or Lyft, you need to obtain the proper coverage to fill in the gaps and ensure that you are fully protected while you are on the road. This may mean purchasing rideshare insurance or a commercial insurance policy if rideshare coverage is not yet available in your state. Thus far, 43 states (including Maryland) have rideshare coverage available. However, the cost of this type of policy varies widely depending on the insurer you choose.

To start with, let your current insurer know you are considering driving for a rideshare company, and ask how that would affect your current coverage. If you do not take this step, they may find out about it and cancel your policy, or they may refuse to cover a claim if there is a ridesharing exclusion in the policy. If your insurer offers rideshare coverage, it may be just a rider that needs to be added to the policy you have. If they do not, you may need to look for a new insurer to provide this coverage.

If you need to find another insurance company for rideshare coverage, the best place to start is to speak with an independent insurance agent. Independent agents work with several of the top insurers in your state. And because they are not captive to any one company, they are able to shop around for you and find the rideshare or commercial policy that best suits your needs and budget.