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By KAYDA NORMAN
A note about the pandemic: Amid the COVID-19 pandemic, many insurance companies are extending coverage to automatically include a driver’s personal vehicle when they are delivering food, medicine and other essentials for a delivery company. For more information, see NerdWallet’s coronavirus and car insurance guide.Insurance for Uber and Lyft drivers — on top of those companies’ coverage — is the best way to be fully covered on the job. Often called rideshare insurance, these hybrid policies include coverage for personal auto use and for the times drivers are signed in to a ridesharing app but not covered by Lyft’s or Uber’s insurance.
Drivers for on-demand delivery companies like Grubhub, Instacart and Uber Eats also need rideshare insurance to avoid a coverage gap.
Why delivery, Uber and Lyft drivers need rideshare insurance
You need rideshare insurance in any situation where you drive your car to earn money, whether you drive for ridesharing companies like Uber or Lyft, or an app-based delivery service.
Not only is your personal auto insurer unlikely to cover any accidents that happen during your ridesharing gig, but it could even cancel your policy if it finds out you haven’t disclosed you drive the car for money. Even if you have coverage from the company you rideshare for, it likely won’t apply the entire time you’re on the job.
Rideshare insurance isn’t available everywhere. If you can’t get it, you would need a commercial insurance policy to be fully insured and avoid being dropped by your carrier. These plans have higher liability limits than typical policies — and higher prices to match. According to insurance agent group Trusted Choice, the average commercial policy for a passenger car costs from $1,200 to $2,400 a year or more.
Lyft and Uber Insurance
Uber insurance or Lyft insurance provides minimal coverage while you have the app on and are waiting for a request — known as Period 1. Fuller coverage kicks in once you’ve accepted a ride and are carrying passengers.
Here’s how the rideshare insurance periods (sometimes called “phases”) work:
- Period 0: App is off. Your personal policy covers you.
- Period 1: App is on; you’re waiting for a ride request. Personal auto insurance without ridesharing coverage doesn’t cover you. Your rideshare employer’s policy is limited to liability coverage.
- Period 2: Request accepted, and you’re en route to pick up a passenger. Your Uber or Lyft insurance policy is in full force.
- Period 3: You have passengers in the car. Your Uber or Lyft insurance policy is in full force.
Lyft insurance and Uber insurance are almost identical. However, the deductible amounts for comprehensive and collision insurance are different. A deductible is your share of repair costs before your insurer pays the rest of a claim. Lyft’s deductible is $2,500, while Uber’s is $1,000.
Lyft and Uber insurance by period
Rideshare insurance for delivery app drivers
If you’re driving for an on-demand delivery service that does offer car insurance, check its policy carefully — coverage differs from company to company and is limited in all cases.
For example, Grubhub and Instacart don’t provide any car insurance, but you’ll need your own coverage to drive for them. Meanwhile, DoorDash offers only liability insurance while the food you’re delivering is in your car.
As with a rideshare company, the insurance your delivery app provides will depend on the period you’re in:
- Period 0: App is off. Your personal policy covers you.
- Period 1: App is on; you’re waiting for a request. A personal policy without ridesharing coverage doesn’t cover you. Some delivery app companies offer coverage.
- Period 2: Request accepted, and you’re en route to pick up a delivery. Some delivery app companies offer coverage.
- Period 3: You have the food or goods in the car. Your employer’s policy is in full force.
Where to get rideshare insurance
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