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Transportation has always been an essential part of life. Throughout history, the modes of transportation have evolved, particularly public transportation.
Today, we have buses, subways, and taxis. And the newest addition to public transportation is ridesharing.
Ridesharing takes advantage of a major tool of the 21st century — the internet. Ridesharing services are provided through three main technologies: GPS, social networks, and smartphones.
By using a ridesharing smartphone app, riders can quickly arrange a one-time shared ride with a nearby driver.
Three companies have already made a significant mark in the world of ridesharing and are considered the best in the industry: Uber, Lyft, and Sidecar (who recently shut down).
There are plenty of perks for those looking to work for any of these rideshare companies.
A student can make some extra cash, or a parent can do the same for the holidays. Or a person may just need the extra income and have the vehicle to do so. Having flexible hours is also a major draw. A rideshare driver could also simply be an extrovert who’s not afraid to talk and enjoys the idea of sharing a ride with strangers.
Ridesharing is an appealing alternative to the age-old cab, but keep in mind that ridesharing is still fairly new and is not available in all cities and states.
Better yet, if you already know that ridesharing is available in your area and also want to make sure you are adequately covered, start comparison shopping for insurance today! Enter your ZIP code above to compare the best auto insurance rates for ridesharing!
Along with other companies wanting to make a name for themselves in this business, it appears that Tesla — the company responsible for the new technology to create auto-piloted cars — has hopped on the bandwagon and has plans to break into the ridesharing market.
There used to be a question of whether ridesharing should be legalized, but thanks to state-level legislative bills most states now allow it, but not all states are onboard as of yet.
Currently, there are no state-wide level bans as Nevada recently overturned its ruling, thanks to Uber.
So far, Alaska, Wyoming, and South Dakota are excluded from the ridesharing services of Uber and Lyft for various reasons:
- Alaska – Uber may return to Anchorage soon, but there was a dispute on city and state level
- Wyoming – A law needs to change in order for the state to support the companies associated with ridesharing
- South Dakota – A bill was passed in May to allow Uber, but Uber had not yet opened operations in the state
Though more cities are in favor of ridesharing opportunities, some cities are pushing back. Contention exists on both sides — state law and the ridesharing companies — as to what should or should not be included in ridesharing regulations.
The major cities caught in the crossfire of this debate are:
- Newark, New Jersey
- Tampa Bay and Miami, Florida
- New York City, New York
- Boston and Cambridge, Massachusetts
- Chicago, Illinois
- Austin (Seven Ridesharing alternatives), Houston, Galveston, and Corpus Christi, Texas – (Proposed legislature may put an end to any bans)
With a constant discourse concerning the laws and regulations on ridesharing, it is increasingly important that individuals understand the laws regarding auto insurance and rideshare services.
Ridesharing Companies and Their Driver Policies
Every ridesharing company must have a policy in place for every driver.
There are three possible stages for a rideshare driver during a work shift. These three stages are called Period 1, Period 2, and Period 3:
- Period 1 – The ridesharing app is open, but the driver has not accepted a request, is not on his/her way to a passenger, and does not have a passenger in his/her car
- Period 2 – Begins when the driver accepts a request and is on his/her way to pick someone up
- Period 3 – Begins when his/her passenger(s) get into the car
For every period, there should be insurance coverage to protect the driver and passengers. Uber and Lyft have easily spelled out what an individual would need with regard to auto insurance coverage when considering becoming a rideshare driver.
– Lyft’s Requirements
Lyft has listed four insurance coverages included in their driver policies:
- Contingent Liability (i.e., coverage only while waiting for a ride request)
- Contingent Comprehensive and Collision
- Uninsured/Underinsured Motorist
- Primary Automobile Liability
The last three coverages are only in effect from the time a driver accepts a ride request until the time the ride has ended in the smartphone app.
– Uber’s Requirements
Uber offers an even more detailed description of which insurance coverage applies to which period. The company broke rideshare insurance into three categories:
#1 – On a Trip
Uber has a $1 million insurance policy that will cover a driver’s liability and what might happen between Point A to Point B. Uber’s insurance policy includes these three coverages:
- $1 Million Liability – A commercial insurance policy that covers injuries or damages to third parties and their property. It protects the driver financially and takes precedence over any personal auto coverage the rideshare driver might have.
- $1 Million Uninsured/Underinsured Motorist Injury – If another driver is at fault for a car accident and does not have adequate insurance, those who were bodily injured in the rideshare vehicle will be taken care of.
- Contingent Collision and Comprehensive – Any physical damage that occurs during a trip is covered and is treated as long as the rideshare driver has personal collision and comprehensive coverage.
#2 – Between a Trip
Uber provides a third party liability plan that meets or exceeds the third party liability insurance requirements of every U.S. state.
The liability covers bodily injury up to $50,000 with a total of $100,000 for the accident and up to $25,000 for property damage. Technically, the coverage ratio would be listed as $50,000/$100,000/$25,000.
#3 – Offline
Since it was already established earlier that insurance is required while on a trip, a rideshare driver must have personal auto insurance and is still required to meet state regulations.
Every ridesharing driver needs to have auto insurance in place. If you are already driving for a ridesharing company but your insurance company does not know, you need to make your insurance provider aware.
Click here to see the second table, which displays auto insurance companies offer Ridesharing insurance in your state!
Otherwise, there may be repercussions:
- Your insurance provider could choose not to cover you in an accident
- Your insurance provider could cancel your policy and refuse coverage
It’s better to be dropped from an insurance company for providing honest and accurate information about rideshare services than to keep the information from a company and then get in an accident.
Not informing your insurance company that you are a rideshare driver makes you liable for any accident-related costs.
On the other hand, if your insurance company cancels your policy due to being a ridesharing driver, you are free to find an insurance company that will provide coverage to meet your needs.
Click here to find insurance companies offering ridesharing insurance by state. Take notice, though, that some companies offer policies for only Period 1 and others offer policies from Periods 1 to 3.
A Final Word
If you are a rideshare driver or plan to be one soon, you need to inform your insurance company. That way, you have time to look for a company that will cover you as a ridesharing driver in case your current insurance company refuses to do so.
If your current insurance policy does allow for ridesharing, make sure your existing insurance policy covers the gap. If it doesn’t, find a policy that will work for you as a rideshare driver.
Start comparison shopping today for the best auto insurance rates out there for a rideshare driver. Enter your ZIP code below to get started!