Ridesharing has revolutionized how people commute in the United States. With companies like Uber and Lyft providing flexible earning opportunities, more drivers than ever are hitting the road. However, while driving for a rideshare service might seem simple, the insurance part of it is anything but. Many drivers are unaware that their personal auto insurance may not fully protect them while driving for Uber or Lyft. That’s where rideshare insurance comes into play.
So, the big question is: Do you need rideshare insurance? The short answer is: yes, if you’re a rideshare driver. But let’s dive deeper into why.
1. Understanding the Insurance Gap
Rideshare drivers operate under a unique situation — they’re using a personal vehicle for commercial use. This creates a grey area when it comes to insurance coverage.
Here’s a breakdown of the coverage phases during a rideshare trip:
- Phase 0 – Personal Use: You’re not using any rideshare app. Your personal auto insurance is fully active.
- Phase 1 – App On, No Ride Accepted: You’ve turned on the Uber or Lyft app, but haven’t accepted a ride. This is where many insurance policies don’t cover you.
- Phase 2 – Ride Accepted, En Route to Passenger: You’re heading to pick up a rider. Limited coverage from Uber/Lyft applies.
- Phase 3 – Passenger in the Car: Uber and Lyft provide liability and collision coverage (if you have it), but deductibles are high.
Without rideshare insurance, you’re exposed during Phase 1 and possibly underinsured in Phases 2 and 3.
2. What Does Rideshare Insurance Cover?
Rideshare insurance is a special add-on policy or endorsement to your personal auto insurance that fills the gap between your coverage and the limited protection offered by rideshare companies.
Depending on the provider and state, rideshare insurance can cover:
- Liability coverage during Phase 1 (when the app is on but no ride accepted)
- Collision and comprehensive coverage for your vehicle (even when Uber/Lyft coverage applies, to help with deductibles)
- Medical payments or uninsured motorist coverage
- Optional add-ons like roadside assistance
Some insurance companies offer hybrid policies that combine personal and rideshare coverage, eliminating the need for separate policies.
3. What Insurance Do Uber and Lyft Provide?
Both Uber and Lyft provide limited coverage for their drivers, broken into three phases:
Phase 1 – App On, Waiting for Request
- Liability only:
- $50,000 per person for bodily injury
- $100,000 per accident for bodily injury
- $25,000 for property damage
No collision or comprehensive insurance during this phase.
Phase 2 – En Route to Pick Up
- $1 million in liability coverage
- Collision and comprehensive coverage (only if you have it on your personal policy)
- Deductibles:
- Uber: $2,500
- Lyft: $2,500
Phase 3 – Passenger in Vehicle
Same as Phase 2 – full liability, contingent collision and comprehensive, with high deductibles.
Key point: Uber/Lyft coverage only applies when the app is active and a ride is in progress. There’s no protection when you’re logged off or using your car personally.
4. What Happens Without Rideshare Insurance?
Let’s say you’re driving for Lyft, and while waiting for a ride request (Phase 1), you get into an accident. If you only have personal auto insurance, your insurer may deny the claim because you were using the vehicle for commercial purposes. Lyft’s insurance doesn’t fully cover Phase 1, so you could be left paying out of pocket.
Even worse, your insurance company might cancel your policy for failing to disclose commercial use of your vehicle. This can lead to higher premiums or being denied coverage entirely in the future.
5. Is Rideshare Insurance Required by Law?
Currently, rideshare insurance is not federally required, but many states do have laws mandating certain levels of insurance for rideshare drivers. For example:
- California, Colorado, and Illinois require drivers to have coverage during all phases.
- Some states mandate that rideshare companies provide coverage but leave the personal part up to the driver.
Regardless of the law, if you’re using your personal car to make money, it’s smart to get the right coverage.
6. How Much Does Rideshare Insurance Cost?
The cost depends on your state, vehicle, driving record, and the insurer you choose. On average, rideshare insurance costs an additional $10–$30 per month added to your personal policy.
Some insurers may offer discounted bundles or hybrid policies, which can be more affordable than maintaining a separate commercial auto policy.
7. Which Insurance Companies Offer Rideshare Coverage?
Many major insurers now offer rideshare policies, including:
- State Farm – Offers a single policy that covers personal and rideshare use.
- GEICO – Rideshare coverage available in most states.
- Allstate – Provides a rideshare endorsement.
- Progressive – Offers rideshare coverage in several states.
- USAA – For military members, with rideshare options in select areas.
It’s best to ask your current provider if they offer rideshare coverage or shop around for quotes if they don’t.
8. Tips for Rideshare Drivers
- Be honest with your insurer. Always disclose your rideshare driving status.
- Keep records of your driving. This can help during claims.
- Understand your deductible. Uber and Lyft’s collision deductibles are high ($2,500).
- Review your coverage annually. Your driving habits may change, and insurance rates fluctuate.
9. Final Thoughts – Do You Really Need It?
If you’re driving for Uber or Lyft — even occasionally — then yes, you do need rideshare insurance. It protects you financially and legally and helps avoid unpleasant surprises when filing a claim.
While Uber and Lyft do provide some protection, it’s not enough on its own. The small investment in a rideshare insurance policy can save you thousands of dollars and protect your livelihood.
So before your next trip, take a moment to call your insurer and ask: “Am I covered while driving for Uber or Lyft?” If the answer is no — it’s time to get rideshare insurance.
Stay safe, stay covered, and drive smart.