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Uber Insurance Explained

By Posted : July 12, 2018

What you need to know: Ridesharing and insurance

You’ll need to start with a commercial car insurance policy or a personal car insurance policy that is rideshare-friendly -- that is, it covers you even when you are working. Most don’t.

Uber's insurance doesn't cover you at all when its app is closed. You need your own personal auto policy for those times.

When the app is open, Uber's coverage applies in some circumstances, and your own rideshare-friendly policy in others. There are three “periods” in the rideshare world, according to insurers:

  • Period 1: This is when you are trolling around town with the Uber app open, waiting to be matched with a rider.Period 1 tends to be the gray area regarding liability.
  • Period 2: You have been matched with a rider and are en route to pick them up.
  • Period 3: Rider is in the car. Period 3 ends when the rider exits the car.

When you have an accident (and the odds of an accident grow the more miles you rack up), you’ll need to know which insurance company should pay the bills for that period.

If you report an accident to Uber, your account won’t be reactivated until Uber has cleared your car for return.

The proof of insurance provided by your personal auto policy should be sufficient in case of an accident.

What Uber insurance covers

Uber offers its drivers some liability protection, but coverage levels vary dramatically depending on whether you have a rider or not. Collision and comprehensive can be especially tricky. And your own injuries are never covered unless someone else is at fault.

Here is a quick rundown of Uber coverage levels:

  • Insurance coverage during Period 1: Uber’s liability limits are relatively low during Period 1, and comprehensive and collision are nonexistent.
  • Liability: Uber offers liability coverage with limits of 50/100/25 ($50,000 per person bodily injury, up to $100,000 per incident, and $25,000 for property damage). This is contingent coverage in most states. That means you must make a claim with your insurer first. If it denies your claim, Uber’s insurance will step in.
  • Collision and comprehensive: Uber doesn’t offer any collision or comprehensive during Period 1. If you are not carrying these coverages on your personal policy, you bear all the costs to repair your vehicle if you are at fault in an accident. Even if you are not at fault, you may wish to use your personal collision coverage – paying the deductible, too – and get your car repaired on your own terms while your insurance company fights for reimbursement on your behalf.
  • Uninsured/underinsured motorist: Uber does not offer any uninsured/underinsured coverage during this period; you will need to use your own uninsured motorist coverage or personal health insurance policy if you are injured by someone without insurance.

Requirements are different for Period 1 in states such as California and Maine, where state law takes away the contingency for liability coverage. Traditional private car insurance policies no longer apply in Period 1; you have to either buy a rideshare-friendly private policy or commercial livery coverage, or Uber must step in. Uber still won’t pay for damage to your car or your injuries if you’re at fault, and under the new state laws, your personal car insurance doesn’t have to, either, unless you’ve bought rideshare-specific coverage.

Insurance coverage during Periods 2 and 3: Your liability is well-covered, but collision and comprehensive get a bit complicated.

  • Liability: This is where that $1 million policy that Uber brags about takes effect, and it should protect you in most cases.
  • Collision and comprehensive: Uber offers comprehensive and collision during Periods 2 and 3, but it is contingent. If you have collision and comprehensive on your policy but your insurer denies your claim, Uber’s insurance will step up. Their policy has a $1,000 deductible, which you will have to cover.
  • Uninsured/underinsured motorist: Uber has a $1 million policy in force, which should be sufficient.

What we recommend for rideshare drivers

There are three types of insurance you absolutely should have, in addition to a rideshare endorsement, and a couple that should at least be on your radar.

Liability: Liability insurance is mandatory in every state. It covers injuries to another person or damage to their property due to an accident you cause. Liability will never cover your own car or your own injuries. Some states have very low limits; for example, California requires just $5,000 for property damage – and most cars you might hit are worth more than that. You’d have to pay anything over your limit. Additional liability coverage (most experts suggest 100/300/50 for homeowners with savings) is generally quite inexpensive.

Collision/comprehensive:  These coverages are not mandatory in any state. If you have a loan on your vehicle, your lender typically requires them. Collision will pay to repair or replace your vehicle if it is damaged in an accident with another vehicle or stationary object. Comprehensive covers vehicle damages that are not caused by a collision such as hail, fire, vandalism or animal strike. Resist the temptation to drop collision and comprehensive unless you can write a check for another vehicle. Keep an amount equal to your deductible in savings. A majority of drivers choose $500 as their deductible.

Uninsured/underinsured motorist: Some states require this coverage, and others allow you to reject it. Don’t. If you are in an accident and the other driver is at fault but doesn’t have car insurance, uninsured motorist covers your injury-related medical expenses and those of your passengers. It can cover your lost wages and pain and suffering. If the driver who hit you has insurance, but low limits, underinsured coverage will cover the difference. Choose coverage amounts that match your own liability limits.

You should also consider:

Gap coverage: You’re putting a lot of miles on a newer car; your insurance company will pay only the actual cash value of your car if it’s totaled, not what you owe to the bank. Gap covers the difference.

Medical payments: This insurance covers the cost of medical expenses that are associated with car accidents, including the deductible on your health insurance if you have it. If you don’t have health insurance, a medical payments policy is very, very good idea.

Survey shows many drivers fail to get sufficient ridesharing insurance coverage

There have always been issues when it comes insurance for rideshare drivers and while numerous insurance companies now offer a rideshare endorsement, many drivers still take their chances when it comes to coverage.

According to the 2018 survey of 1,200 drivers by The Rideshare Guy, Harry Campbell, 46.5 percent of respondents said they have purchased rideshare insurance while 46.8 say they have not. The rest declined to comment which more than likely means they are not carrying a rideshare policy.

Why risk hitting the road without coverage? While the availability of rideshare insurance as well as the cost can be factors, Campbell speculates that drivers are simply unaware of the need, "I think the biggest reason is that drivers are just unaware they need special rideshare coverage to drive. Many simply do not know that rideshare driving is typically not covered by personal insurance companies or that Uber and Lyft's policies are not adequate."

The data also showed that 55 percent have notified their personal insurance company that they are a rideshare driver while 28 percent have kept their insurer in the dark and 9.7 declined to answer.

Luckily, only 17.3 percent of respondents have had to make a claim on their insurance while working for a rideshare service.

Drivers who are not carrying rideshare coverage, or do not have a commercial policy are putting themselves and their livelihood at risk. There are major gaps in the coverage provided by Transportation Network Companies (TNC), which is the technical name for businesses such as Uber and Lyft.

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