If you have a work gig driving for a company like Uber or Lyft, rideshare insurance can provide critical coverage if you get into a car accident. While rideshare companies offer some coverage, it could be woefully inadequate and you could be faced with paying out of pocket for steep car repair and medical bills.

Rideshare insurance is a good choice for a driver who wants to bridge the gap between their personal car insurance and the coverage offered by rideshare companies. So before you turn on your rideshare app and pick up a passenger, here’s what you need to know.

The Stages of Rideshare Driving

To understand the insurance for rideshare driving, it’s important to know the three phases while a rideshare app is on:

  • Available: The driver is available to pick up a passenger.
  • En route: The driver has accepted a ride and is on the way to pick up the passenger.
  • On the trip: The driver has picked up the passenger and is on the way to the passenger’s destination.

When an Uber or Lyft rideshare app is off, your personal auto insurance applies. Once your rideshare app is on, Uber and Lyft provide some coverage. Knowing the gaps between that coverage is key to making sure you are properly protected. Here’s a breakdown of the three driving periods and what Uber and Lyft cover.

Driving period Uber Lyft

App is on; waiting for ride request

Third-party liability coverage if your personal auto insurance doesn’t apply 

• $50,000 in bodily injury coverage per person

• $100,000 in bodily injury coverage per accident

• $25,000 in property damage coverage per accident

Third-party liability coverage if your personal auto insurance doesn’t apply

• $50,000 in bodily injury coverage per person

•$100,000 in bodily injury coverage per accident 

• $25,000 in property damage coverage per accident

App is on; heading to pick up passenger

• $1 million third-party liability coverage

• Uninsured/underinsured motorist bodily injury coverage

• Contingent comprehensive and collision coverage up to actual cash value of car with $1,000 deductible

• $1 million liability coverage

• Uninsured/underinsured motorist bodily injury and/or first-party coverage

• Contingent comprehensive and collision coverage up to actual cash value of car with $2,500 deductible

App is on; passenger picked up; driver traveling to passenger’s destination

• $1 million liability coverage

• Uninsured/underinsured motorist bodily injury coverage

• Contingent comprehensive and collision coverage; up to actual cash value of car with $1,000 deductible

• $1 million liability coverage

• Uninsured/underinsured motorist bodily injury and/or first-party coverage

• Contingent comprehensive and collision coverage up to actual cash value of car with $2,500 deductible

Breaking Down Coverage

Now, you might be wondering what some of those terms mean. Here are definitions related to insurance for drivers provided by rideshare companies.

Third-party liability coverage

This pays for bodily injury and property damage caused to a third party from a car accident. A third party is someone or something other than the driver or their vehicle. For example, if a rideshare driver rear-ends another car, auto liability insurance pays the other driver.

Uninsured/underinsured motorist bodily injury coverage

This coverage pays for injuries suffered by a rideshare driver and their riders if a car accident happens during a rideshare trip and another driver is at fault who doesn’t have sufficient insurance. This coverage also might apply in the case of a hit-and-run accident.

The coverage limits provided by the rideshare insurance company will vary by state.

Contingent collision and comprehensive coverage

If you carry comprehensive and collision coverage on a personal auto insurance policy, the rideshare company provides collision and comprehensive coverage during the time you’re going to pick up a rider or have a rider. A deductible (which can be substantial) reduces a claim payment for these coverages.

If you don’t carry collision and comprehensive coverage on your vehicle, Uber and Lyft won’t provide it either.

Does My Personal Car Insurance Policy Cover Rideshare Driving?

Personal auto coverage typically excludes rideshare trips. That’s because your auto insurance company has priced the policy assuming you’re driving yourself, relatives and/or friends, and that you aren’t earning money from driving and putting a lot of extra miles on your car.

As a result, a rideshare driver’s personal auto policy typically won’t supply coverage while you’re “at work.”

Many insurers now offer rideshare insurance, including Allstate, Farmers, Liberty Mutual, Progressive, State Farm and USAA.

Minding the Gap

A rideshare driver might be happy with the insurance provided by the rideshare company, especially if the driver carries only the minimum personal auto insurance required by the state. In those cases, a million dollars in liability coverage from Uber can look like a major bonus.

But there can still be gaps, which is where rideshare insurance comes in. For example, rideshare companies don’t typically provide collision or comprehensive insurance when the app is on and you’re waiting for a ride request. And a personal auto policy that includes collision and comprehensive likely won’t cover that period. So if you accidentally back into a pole, you’d have no insurance for the damage.

“Without additional rideshare coverage from their personal auto insurer, drivers may find their existing coverage may not apply to a loss that occurs while they are acting as a rideshare driver,” says Luis Sahagun, a spokesperson for Farmers Insurance.

In some states, a rideshare driver might be able to buy a rideshare endorsement, or add-on, for a personal auto insurance policy. This endorsement can help fill gaps between the rideshare company’s coverage and a driver’s personal coverage. For instance, a rideshare endorsement may pay the $500 difference between a rideshare company’s $1,000 deductible for collision coverage and a $500 deductible for the driver’s own collision coverage.

Insurance Companies That Offer Rideshare Insurance

Here are insurance companies that offer rideshare insurance coverage, the policy types and what’s covered by each policy.

Keep in mind, rideshare insurance might not be available in every state and what’s covered could vary by state. It’s a good idea to speak with your insurance agent to make sure you understand what’s specifically covered by your policy.

Company Product name Policy types What's covered?
Allstate Allstate Ride for Hire Policy endorsement Covers when you are waiting for a ride request; helps pay the rideshare company’s deductible of up to $2,500 when en route or on the trip
American Family American Family Rideshare Endorsement Policy endorsement Covers when the app is on and waiting for a ride request

Erie

N/A Available to drivers who put business use designation on auto policy Covers each part of trip
Farmers Farmers Rideshare Policy endorsement Covers when the app is on and waiting for a ride request
Mercury N/A Policy endorsement Covers when the app is on and waiting for a ride to be request
Progressive N/A Policy endorsement or driver must get commercial policy depending on the state Coverage depends on your state and policy

State Farm

N/A Policy endorsement Covers when app is on and waiting for a ride request; also covers when transporting a rider (except liability coverage)

Travelers

N/A Policy endorsement Covers when app is on and waiting for a ride request (currently only available in CO and IL)

USAA

Rideshare Gap Coverage Policy endorsement Covers when app is on and waiting for a ride request

The cost of a rideshare endorsement or insurance policy varies among companies. State Farm says its rideshare insurance endorsement typically adds 15% to 20% to the policyholder’s premium. USAA says its rideshare add-on costs as little as $6 a month.

“I highly recommend that all rideshare drivers have rideshare insurance,” says former rideshare driver Harry Campbell, founder and owner of The Rideshare Guy blog and podcast.

What Happens if You Hide Your Driving Gig?

Failing to divulge to your insurance company that you’re a rideshare driver could lead to negative consequences, says Loretta Worters, a spokesperson for the Insurance Information Institute, an industry trade group.

For instance, an insurer might reject a claim for damage a rideshare driver’s vehicle sustains in a crash if the driver doesn’t have a rideshare policy or rideshare endorsement. Or the insurer might drop the driver as a customer.

“This could be financially devastating to someone who is driving for business and has no financial protection,” Worters says.

Sahagun says Farmers relies on its customers to report when they’ve decided to become a rideshare driver since the insurer has no other way to gather that information. So it falls on rideshare drivers to know what actions are needed to get the right protections while working.