With the rise of ride sharing services like Uber and Lyft, more and more people are turning to these services as a way to make some extra money or to get around town without owning a car. However, if you’re a driver for one of these companies or you use ride sharing services frequently, it’s important to understand the insurance coverage that’s available. In this article, we’ll discuss what ride sharing insurance is, how it works, and what you need to know to ensure that you’re properly covered.
What is ride sharing insurance?
Ride sharing insurance is a type of insurance policy that’s designed to provide coverage for drivers who use their personal vehicles to transport passengers for a fee. In most cases, traditional auto insurance policies don’t provide coverage for ride sharing activities, which means that drivers who aren’t properly insured could be at risk of financial loss in the event of an accident.
Ride sharing insurance policies are typically offered by the ride sharing companies themselves or by third-party insurers. These policies can provide coverage for a range of situations, including accidents that occur while the driver is en route to pick up a passenger, while the passenger is in the car, and while the driver is waiting for another ride request.
It’s worth noting that ride sharing insurance is not the same as commercial auto insurance, which is designed for businesses that use vehicles to transport goods or passengers as part of their regular operations. Ride sharing insurance is specifically designed for individuals who use their personal vehicles for ride sharing services.
How does ride sharing insurance work?
The specifics of how ride sharing insurance works can vary depending on the policy and the provider. However, in general, these policies are designed to provide coverage in three main phases:
Phase |
Description |
|---|---|
Phase 1 |
Driver is waiting for a ride request |
Phase 2 |
Driver is en route to pick up a passenger |
Phase 3 |
Passenger is in the car |
During Phase 1, many ride sharing companies provide limited liability coverage, which typically includes up to $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $25,000 per accident for property damage. However, this coverage may not be enough to fully protect drivers in the event of an accident.
During Phase 2 and Phase 3, ride sharing companies generally provide higher levels of coverage, which can include liability coverage for bodily injury and property damage, collision coverage, and even uninsured or underinsured motorist coverage. However, the specifics of the coverage can vary depending on the company and the policy, so it’s important to review the details carefully.
What do you need to know about ride sharing insurance?
If you’re a driver for a ride sharing company or you frequently use ride sharing services, there are a few key things you need to know about insurance coverage:
1. Your personal auto insurance policy may not provide coverage for ride sharing activities.
Most personal auto insurance policies include exclusions for commercial activities, which means that they may not provide coverage for accidents that occur while you’re driving for a ride sharing service. Some insurers offer endorsements or add-ons that can provide coverage for ride sharing activities, so it’s important to check with your insurer to see what options are available.
2. Ride sharing companies may provide limited liability coverage during Phase 1.
During Phase 1, many ride sharing companies provide limited liability coverage, but this coverage may not be enough to fully protect drivers in the event of an accident. If you’re a driver, consider purchasing supplemental ride sharing insurance coverage to help fill in any gaps in your coverage.
3. Ride sharing companies may provide higher levels of coverage during Phase 2 and Phase 3.
During Phase 2 and Phase 3, ride sharing companies often provide higher levels of coverage, which can include liability coverage for bodily injury and property damage, collision coverage, and even uninsured or underinsured motorist coverage. However, the specifics of the coverage can vary depending on the company and the policy, so it’s important to review the details carefully.
4. Traditional auto insurance policies may not cover accidents that occur while using ride sharing services.
If you’re a passenger in a ride sharing vehicle, it’s important to understand that your personal auto insurance policy may not provide coverage for accidents that occur while you’re using a ride sharing service. In these cases, the ride sharing company’s insurance coverage may be your only source of protection, so it’s important to understand the limits and exclusions of this coverage.
FAQ
What is the difference between ride sharing insurance and commercial auto insurance?
Ride sharing insurance is designed for individuals who use their personal vehicles to transport passengers for a fee as part of a ride sharing service. Commercial auto insurance, on the other hand, is designed for businesses that use vehicles to transport goods or passengers as part of their regular operations.
Do ride sharing companies provide insurance coverage for drivers?
Yes, most ride sharing companies provide insurance coverage for drivers, but the specifics of the coverage can vary depending on the company and the policy. It’s important for drivers to review the details of their coverage and consider purchasing supplemental ride sharing insurance coverage to fill in any gaps.
Do passengers need to have their own insurance when using ride sharing services?
Yes, passengers should have their own personal auto insurance policy, but this policy may not provide coverage for accidents that occur while using ride sharing services. In these cases, the ride sharing company’s insurance coverage may be the only source of protection.
What should I do if I’m involved in an accident while using a ride sharing service?
If you’re involved in an accident while using a ride sharing service, the first thing you should do is make sure that everyone involved is safe and call for medical assistance if necessary. Then, notify the ride sharing company and your personal auto insurance provider of the accident. Review the details of your insurance coverage and follow the instructions provided by your insurer.
What are the risks of not having proper insurance coverage for ride sharing activities?
Without proper insurance coverage, ride sharing drivers and passengers could be at risk of financial loss in the event of an accident. Depending on the circumstances of the accident and the extent of the damages, the costs of medical bills, car repairs, and other expenses could quickly add up to thousands or even tens of thousands of dollars.
By understanding the insurance coverage that’s available and making sure that you have the proper coverage in place, you can help protect yourself and your finances while using ride sharing services. Be sure to review your options carefully and consult with an insurance professional if you have any questions or concerns.