Want to Drive for Uber? Better Check Your Coverage

To make ends meet, or to build up their nest eggs, many people have turned to moonlighting as Uber or Lyft drivers

However, if you are planning to make some spending money, you need to understand that doing so could invalidate your personal auto policy.

Uber and Lyft are so-called “ride-hailing” mobile apps that connect passengers to drivers. With the phone app, passengers can hail a driver to their exact location, track the driver using their phone’s GPS and pay for the ride with a credit card. Drivers keep the app on when they are waiting for customers or driving to fetch a passenger.

There are typically two levels of insurance involved in these ride-hailing arrangements. The driver carries their own vehicular insurance, while the ride-hailing company also has its own liability policy in place. Here’s what you need to know:

Your policy bars commercial driving

Your personal auto insurance policy may not provide coverage if you are involved in an accident while driving for Uber.

Personal auto policies have an exclusion for “driving-for-hire” – or commercial driving.

This exclusion means that a driver’s standard personal auto insurance would not likely cover them while the ride-hailing application is turned on, regardless of if they haven’t accepted a ride request and have no passengers in the vehicle.

Check your policy or call us and we can find out the extent of any exclusions in your coverage.
The coverage gap

Some states require ride-hailing companies to carry at least $1 million per incident excess liability coverage. The policies are designed to deal with liability claims that a driver’s insurance doesn’t cover.

Ride-hailing companies’ insurance only covers third parties (injuries to others that an Uber or Lyft driver may hit and any property damage the third party sustained).

However, physical damage to your car or injuries you sustain would have to be borne by you if you only have a personal auto policy, since the ride-hailing company’s policy would not cover you.

There is another risk in the coverage gap: The ride-hailing operator’s insurance policy will not cover you if are you hit by an insured driver. Again, you would have to pay for that out of pocket if all you have is a personal auto policy.

How the insurance works

  • When the Uber app is off, you are covered by your own personal policy.
  • When you have the Uber app turned on, a low level of liability insurance becomes active.
  • When a trip is accepted, a higher level of coverage takes effect and remains active until the passenger exits the vehicle.

Tip: Questions to ask Uber*

  • How much liability insurance does Uber provide while I’m transporting a passenger? Do I need more?
  • Will I be charged a deductible and, if so, what is it?
  • Is the commercial liability insurance coverage my main source of coverage, or is it contingent on denial by my personal auto policy?
  • How do I report a claim?
  • At what times am I covered by Uber’s policy?

* Source: The National Association of Insurance Commissioners

What you can do

Insurers have responded to the ride-hailing trend.

There are two ways you can go to ensure coverage for yourself and your vehicle:

  1. Buy a commercial auto policy that is valid at all times.
  2. Buy a policy that specifically covers you and your vehicle when the ride-hailing app is on.

Ask us about your options!