Driving for a rideshare company sounds great on the surface. You set your hours, meet people from all walks of life and earn money in the process.
If you’re a college student or a retiree wanting to get out of the house more, you might consider it as a viable option. And while it can be for many, there are some things you should consider before taking the plunge.
For starters, you’ll need to use your vehicle for rides and deliveries. Over time, the wear and tear from the miles can reduce your earnings further with oil changes, ample trips to the gas station, tire and brake replacements and other repairs eating into your bottom line. However, there’s an even more critical element that relates to your car insurance.
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The startling truth about insurance and ride-sharing
Being a rideshare driver means you’re driving more miles, putting you at risk for more accidents. A University of Illinois at Chicago study found that one in three rideshare drivers had been involved in an accident. And depending on when the accident happens, it can make a huge difference in your financial protection.
Say you’re starting work for the day and are driving around waiting for your first rider. As you move around the neighborhood, a car pulls out suddenly in front of you, and even with quick reflexes, you’re unable to stop in time, slamming into the vehicle.
The other driver has injuries and significant damage. And your vehicle, well, it’s seen much better days. Then you’re surprised to find you’re on the hook for the damages to your car because your regular policy doesn’t cover ridesharing.
Why? Because your regular policy is for personal use only, not commercial, which is what you would be using it for if you drove for Uber or Lyft.
While both provide limited liability coverage during this time, it’s for other drivers. If your vehicle becomes damaged or you incur any injuries resulting from an accident, you could be on the hook for these costs if you haven’t notified your insurance that you intend to use your covered vehicle for ridesharing purposes. That means you could be without a car if you can’t afford repairs. And if you’re hurt, you could incur significant medical debt.
Thankfully, you can add rideshare coverage to your existing auto insurance policy. And the best way to save money on insurance is to shop around. Use the tool below to explore some of today’s best car insurance offer, powered by Bankrate:
How much does ridesharing insurance cost?
Insurify has a tool that lets you compare rideshare insurance costs in your area. They pool quotes from top providers, like Allstate and Progressive, to help you see how much you’ll pay. Keep in mind your costs vary based on where you live, what you drive and your driving history.
It’s important to note that this extra coverage is only needed during the period when you’re logged into a rideshare app but haven’t yet accepted a trip.
Once you accept a ride request, companies like Uber and Lyft provide more comprehensive coverage that extends to you, your vehicle and other motorists if an accident occurs.
What does ridesharing insurance cover?
Adding rideshare insurance is integral to protecting your finances. Here are some of the coverages it includes:
- Liability coverage: Covers damage and injuries that another party incurs resulting from an accident.
- Comprehensive and collision coverages: Covers you financially if your vehicle incurs damage from an accident, weather or theft.
- Uninsured/underinsured motorist protection: If a driver hits you and doesn’t have insurance or their coverage is inadequate, this bridges the gap to ensure you receive the financial assistance you need.
- Deductible reimbursement: It’s an optional policy that covers the difference between the ridesharing’s deductible (often around $2,500) and your policy’s deductible to lower your out-of-pocket costs. What is a deductible in car insurance? It’s the amount you must pay before your carrier pays its share of the claim.
- Additional coverages: You can also add on coverages for roadside assistance, rental car reimbursement and more.
A driver’s checklist before doing ridesharing
(Image credit: Getty Images)
Before signing up, read the qualifications of the provider to ensure you qualify. This is particularly the case for college students, as Uber requires a year of driving experience before being approved.
Once you qualify, reach out to your insurance carrier. Many of the top carriers allow you to change coverages in their app, or you can call to request ridesharing coverage. Ask them what their policy covers and any additional coverages you might want to consider.
Ultimately, while it’s an extra step, securing coverage for ridesharing is integral. It bridges the gap between the lapses in coverage for when you’re awaiting work and when you’re working. This will protect you financially from having to pay significantly out-of-pocket to repair or replace your vehicle and any other bills that arise.