Rideshare insurance for Uber and Lyft drivers: the coverage gap and how to close it

Why your personal car insurance usually doesn't cover rideshare driving

Personal auto policies are priced for personal use. Most contain a livery exclusion, which removes coverage when the car is used to carry people or goods for a fee. The NAIC, the national association of state insurance regulators, says this exclusion is what creates the potential coverage gap for drivers of transportation network companies (TNCs) such as Uber and Lyft. The Texas Department of Insurance lists driving for a ride-hailing service, or delivering food or other items for a fee, among the things most personal policies don't cover.

The risk goes beyond an unpaid claim. Arizona's insurance department warns that an insurer can cancel a personal policy over this kind of driving unless the driver has coverage through an endorsement. Lyft's own insurance page also says most personal auto policies won't cover you while you drive with Lyft.

In 2015 the NAIC adopted a white paper recommending that state laws require the TNC or the driver to carry insurance at all times. Many states have since passed TNC insurance laws, often based on a model from the National Council of Insurance Legislators, and the NAIC notes that several insurers have developed products to fill the gaps.

The rideshare coverage gap, phase by phase

Insurers and state laws split rideshare driving into phases, often called periods. Uber and Lyft describe their own coverage this way:

Both companies say their contingent collision and comprehensive pays up to the car's actual cash value, and only if your personal policy already includes collision and comprehensive. Uber notes that its contingent car coverage does not apply to rental cars, and both companies say uninsured motorist, PIP and medical payments coverage may apply depending on the state.

Where drivers are exposed

• Period 1 is the weakest phase. The app companies' liability limits are much lower than during a ride, and neither covers damage to your own car. If your personal policy excludes rideshare use, you have no collision coverage at all while waiting for requests.
• The deductible during rides. Even when contingent coverage applies, you pay the first $2,500 of damage to your car.
• Your own injuries. First-party coverages such as uninsured motorist, PIP and medical payments vary by state. Uber and Lyft describe them as applying only in some states or circumstances.
• No own collision coverage, no contingent coverage. If you carry liability only on your personal policy, the app's contingent collision and comprehensive does not apply.

Example: during a ride, you slide into a pole and cause $6,000 of damage to your car. If your personal policy includes collision and comprehensive, the app's contingent coverage pays $3,500 after the $2,500 deductible. If your personal policy is liability only, the contingent coverage does not apply and the repair is your problem.

What state TNC laws require

State laws set the floor for what the TNC or the driver must carry. North Dakota's insurance department, for example, explains that its law requires:

Limits differ by state. Lyft's page notes lower required limits in Arizona and Nebraska, and lower combined limits during Period 2 in Arizona and Maryland, to match those states' laws. Arizona's insurance department explains that the required coverage can come from the driver's personal policy if it expressly covers TNC use, from the TNC's policy or from a commercial policy. Check your state insurance department for the rules where you drive, and compare general minimums with our state minimums tool.

Rideshare endorsements and policies

A rideshare endorsement is an add-on to your personal auto policy that removes or narrows the livery exclusion for TNC driving. North Dakota's insurance department advises drivers to buy a TNC-specific endorsement so their own policy can respond while they drive for a TNC, and Arizona's says some insurers now offer coverage that can be added to a personal policy.

What an endorsement covers depends on the insurer, so compare the details rather than the name. Questions to ask before you buy:

1. Which app phases does the endorsement cover: only Period 1, or also Periods 2 and 3?
2. Does it extend your collision and comprehensive to the time you are waiting for requests, or only your liability coverage?
3. Does it cover food and package delivery apps as well as rideshare?
4. Does it help with the app company's $2,500 deductible?
5. What does it cost a year, and does it change your other discounts?

Food and package delivery

Delivery work raises the same problem. The Texas Department of Insurance lists delivering food or other items for a fee among the uses most personal policies don't cover. The delivery app's own coverage, if any, varies by company and phase. Ask your insurer whether its rideshare endorsement includes delivery driving, because an endorsement written for passenger trips may not extend to deliveries.

Steps for new rideshare drivers

1. Read your own policy and find the livery exclusion.
2. Tell your insurer you plan to drive for a TNC. Not disclosing it can lead to a denied claim or a cancelled policy.
3. Keep collision and comprehensive on your personal policy if you want the app's contingent coverage to apply.
4. Buy a rideshare endorsement or rideshare policy to cover Period 1.
5. Check the app company's insurance page for your state; Uber shows state certificates of insurance in the driver app.
6. Save for the deductible, or ask whether your endorsement covers part of it.
7. Review coverage when your driving changes, such as moving from part-time to full-time.

For more on the coverages involved, see collision, comprehensive, uninsured motorist and liability. If you have a crash while driving for an app, our guide to what to do after a crash covers the first steps, and filing a claim explains the process.