Rideshare Insurance: A Comprehensive Guide for Drivers

What It Is, When You Need It, and How to Get It

A couple smiles in the backseat as their rideshare driver adds their destination to her phone
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Gary John Norman / Getty Images

Ridesharing is part of the thriving sharing economy. This popular service uses various apps to match someone who needs a ride with a driver who is willing to take them to their destination. Since the demand for ridesharing is increasing, the number of drivers is projected to grow 37% by 2028. 

If you meet the requirements to drive for Uber, Lyft, or another ridesharing service, you can earn money as a rideshare driver. But once you start welcoming strangers into your car, you’re officially driving commercially, which means that your personal auto insurance policy might not cover you if you get into an accident. 

If you’re thinking about driving for Lyft or Uber, it’s essential to understand what rideshare insurance is so you can make sure your policy provides the protection you need. 

Key Takeaways

  • If you’re using your car for business, your personal auto insurance policy likely won’t cover any accident-related costs. 
  • While you’re waiting for a ride request, you only have limited liability protection under the insurance provided by Uber and Lyft. These companies also won’t cover damage to your car unless you’ve been matched with a rider.  
  • A rideshare insurance policy or rideshare endorsement adds coverage while you’re on duty, eliminating coverage gaps.

Do I Need Rideshare Insurance?

When you’re picking up riders in your personal vehicle, you may assume that your personal auto policy covers you. But since you’re earning money by chauffeuring others, it probably won’t. 

Once you log into the rideshare app and mark that you’re available, most personal plans stop providing protection. So, if you get into an accident while you’re waiting for someone to request a ride, you might not be covered. Rideshare insurance fills in this gap so you’re covered all the time, whether your rideshare app is on or off.

If you’re using your car for commercial purposes, don’t try to hide it from your insurance company. If they find out, your insurer could cancel your policy.

Lyft and Uber Insurance Coverage

Ridesharing services like Lyft and Uber are considered transportation network companies (TNCs). And while both Lyft and Uber offer insurance for their drivers, their policies may not completely protect you. 

When you work as a rideshare driver, your work involves three main phases, sometimes known as “periods.” Your TNC’s insurance coverage varies, depending on what phase of rideshare driving you’re in. This table explains the coverage provided by Uber and Lyft during each phase.

App is off App is on—waiting for ride request App is on—matched with or driving passengers
Personal auto insurance coverage only Third-party liability coverage only if your personal auto insurance doesn’t protect you, with the following limits:
•$50,000 per person in bodily injury •$100,000 in bodily injury for each accident
•$25,000 in property damage for each accident
For a covered accident, you have the following coverage:
•$1,000,000 in third-party liability
•Uninsured/underinsured motorist bodily injury (limits depend on state law)
•Contingent comprehensive and collision up to the actual cash value of your car, with a $2,500 deductible

You can see that while you’re on the app and waiting for a ride request, the insurance provided by your TNC is limited to liability coverage. That means if you’re hurt, or your car is damaged in an accident during that phase, you’re responsible for those expenses. 

Once you’ve been matched with or are driving passengers, the TNC insurance provides liability, comprehensive, and collision coverage. But the comprehensive and collision coverages only apply if you have those coverages on your personal car insurance policy, and the high $2,500 deductibles could leave you with unexpected out-of-pocket expenses. 

While the major TNCs like Uber and Lyft provide insurance coverage, not all rideshare companies offer this protection to their drivers. Before you start driving for a rideshare service, make sure you understand what (if any) insurance policies it has in place. 

Enhancing Rideshare Insurance Coverage

Before you’re matched with a rider, your TNC provides only liability insurance, and the limits may not be enough to cover the costs of a serious accident. To help protect yourself, consider purchasing an add-on policy or rideshare endorsement from your car insurance company. 

Here’s an overview of the coverage provided by a selection of rideshare policies from major insurance companies as well as TNC insurance and your personal policy.

Coverage when app is off? Coverage when app is on, waiting for a ride request? Coverage when app is on, matched with or driving passengers?
Personal Insurance Yes Not typically Not typically
Uber/Lyft Insurance No Limited (see table above) Yes ($2,500 deductible) 
State Farm Rideshare Insurance Yes Yes Yes 
Farmers Rideshare Insurance Yes Yes No 
Progressive Rideshare Insurance Yes Yes No
American Family Rideshare Insurance Yes Yes  No

Most rideshare policies provide protection until the TNC insurance policy kicks in, giving you at least some coverage before you’re matched with a rider. 

Rideshare insurance coverage isn’t available in all states. Depending on where you live, you may be required to purchase a commercial auto policy or a commercial for-hire livery policy instead. Check with your insurance agent to see what options are available for you. 

Frequently Asked Questions (FAQs)

How much does ridesharing insurance cost?

Ridesharing insurance is typically an inexpensive add-on to your personal auto policy. With USAA, you can get it for as little as $6 per month. State Farm estimates that rideshare insurance adds 15% to 20% to your current premium.

Which insurance companies offer ridesharing insurance?

Companies that offer this coverage include: 

  • Alliance West Insurance 
  • Allstate
  • American Family
  • Erie Insurance
  • Progressive
  • State Farm
  • USAA

This list isn’t comprehensive, so contact your agent to see whether this type of insurance is available. 

How does ridesharing affect personal insurance coverage costs?

When you apply for a personal auto insurance policy, you need to disclose that you use (or plan to use) your car for ridesharing. The agent will help you select the best coverage for your needs. If you add a rideshare endorsement to your policy, expect your premium to increase. But rideshare insurance helps protect you from having to pay accident costs and potentially having your personal policy canceled, so it’s likely well worth the price.