Will My Personal Car Insurance Cover Ridesharing?

People huddled by car accident as police officer surveys the scene

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Ridesharing has gotten quite popular in recent years, and it's become a nice side gig for a lot of people. But there may be some unexpected expenses in store if you get into an accident, only to find your car insurance won't cover ridesharing.

Any time you use your vehicle to transport passengers and receive payment, you're engaging in ridesharing. But just because you're using your own vehicle doesn't mean your insurance coverage applies. Learn how you can make sure you have the coverage you need before you pick up your first passenger.

What Is Ridesharing?

Ridesharing is any service that pairs drivers using their own vehicles with passengers in need of a ride. The companies that run these services are known as transportation network companies (TNCs). Uber and Lyft are the biggest and most popular ridesharing companies, but there are many others.

These companies all work in similar ways: Drivers sign up for the service and create a profile in the company's app, then turn their availability for passengers on or off. Passengers can find drivers in the app and connect for a ride on short notice. Payments are usually handled electronically through the app.

When you engage in ridesharing, you shift from using your vehicle for personal reasons to business ones. And this distinction is key from your insurance company's perspective.

Although carpooling isn't technically a commercial use of your vehicle, personal policies may not cover all your passengers. If you frequently take non-family riders with you in your vehicle, be sure you check on what your coverage includes for carpooling.

What Your Personal Car Insurance Policy Covers

Personal auto insurance policies are just that: personal. They are designed to cover your vehicle, its passengers, and any vehicles and passengers involved in an accident with you during normal, everyday use. The exact details of your coverage will depend on the policies and limits you select, but regardless, none of these personal policies is designed for commercial use.

Ridesharing is a different story. A personal auto policy will almost always state that it will not cover a driver who is transporting people or belongings for money. Insurance companies have commercial policies designed for these purposes, and they are not eager to blur the lines between insuring taxi drivers and soccer moms.

Where Your Insurance Stops

Generally speaking, insurance companies consider that your personal coverage stops as soon as you turn on your ridesharing app and does not resume until you turn it off. During this time, you are using your vehicle for commercial purposes and thus in need of a commercial policy.

The same rules apply when you use your vehicle for delivery services such as Doordash or Uber Eats. You are still using your car for business, so your personal auto insurance no longer applies.

What Coverage Do I Need for Ridesharing?

Without some additional insurance—either purchased by you or provided by your ridesharing service—you are essentially uninsured from the moment you log in to your ridesharing app on until you log out. The National Association of Insurance Commissioners (NAIC) has identified three separate "exposure periods" during this period that may need different levels of insurance:

  • Period 1: The rideshare app is on, but you are awaiting a match for a passenger.
  • Period 2: You have matched with a passenger and are en route to pick them up.
  • Period 3: The passenger is in your vehicle.

Since the NAIC defined these phases in 2015, state legislatures have been working to provide more definition for legal requirements that pertain to drivers, insurers, and TNCs. Colorado and California are two examples of states that have implemented specific policies in this regard.

Your Ridesharing Insurance Options

The good news is that many TNCs automatically include ridesharing insurance for their drivers.

Lyft and Uber, for example, both insure their drivers as follows:

  • Period 1: Liability coverage of $50,000 injury per person, $100,00 max per accident, and $25,000 property damage limit
  • Periods 2 and 3: Liability coverage of $1 million per accident

Both companies also include coverage for accidents in which you are hit by an uninsured or underinsured motorist, as well as contingent collision and comprehensive coverage. This contingent coverage only kicks in if you maintain collision and comprehensive coverage on your personal policy, and you are required to pay a deductible.

Depending on your insurance provider, some policies, may allow a business use endorsement on a personal policy. This is often much more affordable than an outright commercial auto policy. In any case, it is important to be forthright with your car insurance agent so you know exactly what is and what is not covered by your own policy, and check your TNCs policy.

If you want complete peace of mind, a full commercial auto insurance policy may be the route to go to ensure you are covered no matter what. However, these policies are expensive enough to eat up a significant chunk of the extra cash you're earning for ridesharing.