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Which insurers offer ridesharing policies?

By Posted : 08/19/2015

RidesharingAuto insurers are finally starting to make peace with rideshare drivers.

List of rideshare insurance companies

In case you have been tucked away in the suburbs, rideshare drivers are everyday people who use apps run from companies such as Uber, Lyft and Sidecar to turn their personal cars into taxis of sorts.

Ridesharing -- sometimes called "ride-hailing" -- has been growing at an impressive clip. Uber, the largest service, recently reported it had more than 162,000 active drivers out on U.S. roads.

As drivers embrace the chance to earn extra money hauling strangers around, insurance companies have balked about the risk. Drivers need traditional types of car insurance -- especially liability -- to cover their personal use, and ridesharing companies typically offer coverage that kicks in when a paying passenger is in the car.

In between, though, there’s been a huge gray area: the period when a driver is available for fares but does not yet have a passenger.

The good news, for drivers in some states at least, is that major insurance companies are at last offering options that deal with “transportation network companies,” TNCs, as regulations now label them -- and they appear to be quite a bit less costly than a full-blown commercial policy would be.

When is a taxi not a taxi?

When Uber X launched, it put a commercial policy in place that provided $1 million of liability coverage per incident for their drivers. Lyft offered similar coverage.

The rub is that these policies were only in force from the time a driver accepted a trip from Uber’s app till the driver dropped the passenger off, referred to as Period 2 in the rideshare business.

This leaves the driver, or more accurately, the driver’s personal insurance policy, on the hook when the app is on and the driver is seeking riders, referred to as Period 1.

Unfortunately for rideshare drivers, every personal auto insurance policy ever written specifically excludes coverage if the driver is engaged in commercial activities such as pizza delivery, or say, acting as a taxi.

This led to a lot of lies to insurance companies by rideshare drivers, not to mention denied claims. Even if an insurer decided to cover a rideshare claim, the driver often received a cancellation notice in the mail shortly after the check cleared.

Car insurance for teens is already expensive; for many, the cost of a commercial policy was prohibitive.

“Commercial policies are more expensive than personal auto insurance for a reason,” says Des Toups, managing editor of Insurance.com. “An injured person might press harder for damages if there is a perception that the driver was working for a multibillion-dollar company at the time – even if that isn’t exactly the case for Period 1 drivers who are seeking a fare but don’t have a passenger on board yet.”

A commercial policy that includes livery coverage -- and its much higher liability limits -- typically costs $5,000 to $8,000 depending on location. It can easily cost more.

The 'app-on, app-off' dilemma

That “insurance gap” became a huge issue in late 2013 when an Uber driver hit and killed a 6-year-old girl in San Francisco.

Uber quickly absolved itself of liability because the driver didn’t have a passenger in the car. The driver had $30,000 in bodily injury liability on his personal policy – the California state minimum, nowhere near enough personal coverage to handle the damages. The family sued both Uber and the driver.

Uber and the family eventually reached a confidential settlement, but not before provoking discussions that are now helping to define requirements for these not-quite-taxis.

Several states have now passed laws outlining rules for “transportation network companies” covering background checks, training and insurance requirements. That’s allowed a raft of insurance companies to step in with hybrid policies that straddle personal and commercial use.

In  addition, Uber added Period 1 liability coverage in March 2014. Unfortunately, the coverage is contingent in most states, meaning a driver must file a claim with his or her insurer first (and risk cancellation) before Uber’s coverage will kick in. Lyft offers a similar contingent plan. (See what Uber insurance covers and doesn't cover.)

Rideshare companies

A number of insurers are taking steps to close the gap. While some are only covering Period 1, others are taking on the full ride. Options vary dramatically between states, review summary information for various insurers then scroll down for a table where you can search for insurers that cover your state.

Allstate: The company unveiled a "Ride for Hire" endorsement for ride-sharing drivers in certain states (see table below). It expects the additional coverage to add $15 to $20 a year to a driver's bill.

Get a quote from Allstate >

MetroMile: Uber drivers (and only Uber drivers) in the states listed in the table below can sign up with MetroMile, which recently started offering protection for that all-important Period 1. MetroMile is a specialty insurer that uses a plug-in device called a Metronome to track mileage and charges only for miles driven, also known as pay-per-mile insurance.

Get an Uber quote from MetroMile >

The simplicity of the system is a key advantage, according to MetroMile CEO Dan Preston, “All data verification happens behind the scenes. Because the Metronome device is plugged in at all times, all miles are logged.”

The MetroMile policy is in force until a passenger is assigned, and then Uber coverage takes over for Period 2. Integrated databases allow MetroMile to determine miles that Uber covers versus personal and Period 1 miles.

Farmers Insurance: Farmers Insurance doesn’t care which ride-sharing company a driver is working for, as long as he or she lives in the states shown in our table below.

Get a quote from Farmers >

“One of the unique benefits of the Farmers Rideshare endorsement is that it provides the same coverages a driver currently has in place and extends those benefits to customers during the Period 1,” says Mariel Devesa, Farmers’ head of product innovation.

Coverage reverts back to the ridesharing company when the driver picks up a rider.  In California, Farmers expects a rideshare endorsement to add 8 percent to a customer's premium.

USAA: USAA customers in Colorado can add an endorsement that covers Period 1; expect to pay $6 to $8 a month for the added protection.

MetLife: MetLife is also in the game in selected states (see table below) and is offering Lyft drivers a policy that goes beyond simple Period 1 coverage.

Get a Lyft quote from MetLife >

Metlife covers drivers during all phases of driving, even when a passenger is in the car. Coverage is limited to Lyft drivers. Pricing varies by coverage levels.

Geico: Geico offers ridesharing coverage in several states, as shown in our table below. The policy offers coverage during all phases of driving. Pricing falls somewhere between a personal and commercial policy.

Get a quote from Geico >

Erie: Ridesharing drivers in Illinois or Indiana can sign up with Erie, which will extend ridesharing coverage as long as a driver has “business use” on his or her personal auto policy. “Business-use policies cover people who use their personal car for things like delivering flowers, but historically it has excluded coverage for people who use their cars as taxis. We are removing that exclusion,” explains Erie spokesperson Leah Knapp.

Campbell thinks the availability of options will expand as more states pass laws regulating ridesharing and the number of rideshare drivers continues to grow.

“Active driver numbers are getting into the hundreds of thousands. That is a large market of drivers that insurance companies don't want to lose as customers, which is why we’ve seen a sudden shift all across the U.S. as insurers introduce hybrid policies that allow for rideshare driving,” says Campbell.

Ridesharing periods covered by state and insurer

As of January, 2016

State Allstate Erie Geico Farmers Metlife Metromile Progressive USAA
Arizona 1
Arkansas 1
California 1 1-3** 1***
Colorado 1-3* 1 1-3** 1
Connecticut 1-3
District of Columbia 1-3
Georgia 1-3
Illinois 1-3* 1-3 1-3** 1*** 1
Indiana 1-3
Kansas 1
Kentucky 1-3
Maryland 1-3 1-3
Massachusetts 1
Minnesota 1
Nevada 1
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio 1-3 1-3 1
Oklahoma 1
Pennsylvania 1-3 1-3 1-3**
Rhode Island
South Carolina
South Dakota
Tennessee 1-3
Texas 1-3* 1-3 1 1-3** 1
Utah 1
Virginia 1-3* 1-3
Washington 1-3** 1*** 1
West Virginia
Wisconsin 1-3 1

* All coverages apply to Period 1; deductible coverage may be available in Periods 2 and 3.

** Lyft is currently the only rideshare provider covered.

*** Uber is currently the only rideshare provider covered.

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