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Gig Driving and Its Impact on Car Insurance


In recent years, many companies have been created with the goal of providing people with services that are easily accessible through apps on their smartphones. These companies provide services such as food delivery, grocery delivery, and rideshare transportation, all available to customers at the touch of a button. For companies such as Uber and DoorDash to be able to provide these services, they employ drivers who can set their own schedules and work as they please. However, most drivers are required to use their own vehicle to work for these companies, which can add complications to their existing insurance policies, especially if they are transporting other people.

Gig Driving Qualifications

The qualifications for working these types of jobs differ depending on what you will be transporting. Drivers working for companies that transport food and grocery items will not necessarily need to meet as strict of qualifications as drivers providing rideshare services. Most rideshare companies, such as Uber and Lyft, require potential drivers to meet the following standards:

  • At least one year of experience driving with a license in the United States, or 3 years of experience if you are younger than 23
  • A valid United States driver’s license
  • An eligible vehicle that has 4 doors

Potential drivers must also provide certain documentation, including but not limited to:

  • A photo of your driver’s license
  • Proof of residency
  • Proof of your car insurance

People planning to drive with these companies must also complete an online screening, which reviews criminal history and driving records. If the results of your background screening do not match what the company is looking for in their employees, they will likely deny your application.

Gig Driving Jobs and Car Insurance

All gig driving jobs, such as jobs through Uber and Lyft, require their drivers to have car insurance. However, all car insurance policies differ, and some are more friendly to these sorts of jobs than others. All personal car insurance policies include a list of exclusions, and some companies choose to exclude driving for hire. The most common reason is because driving for hire for companies like Lyft and Uber makes you drive much more frequently, and with more passengers, increasing the possibility of an accident. While some companies do not include this exclusion, they will increase your rates substantially when notified of your new line of work. You must notify your insurance company when you begin working as a rideshare driver, because if you don’t, they may decide to cancel your coverage.

Will the Company I Drive for Provide Insurance?

Unfortunately, your personal car insurance policy is not likely to fully cover an accident that occurs while you are ridesharing or driving for a rideshare service. However, these companies usually provide an umbrella policy that will cover you in the event of an accident while you are working. For example, Uber provides insurance on behalf of their drivers that protects both the driver and the passengers using the service.

This insurance is only active when you are performing work for Uber. When you are driving for your own purposes and the Uber app is not in use, your own insurance will be in effect. When you are actively on your way to pick someone up while working for Uber, they provide you with the following coverage:

  • $50,000 in bodily injury insurance per person
  • $100,000 in bodily injury insurance per accident
  • $25,000 in property damage per accident

This only goes into effect if your personal coverage is less than these amounts. However, Uber provides a significantly higher amount of insurance coverage for when you are transporting customers instead of waiting for them:

  • One million dollars in third-party liability insurance
  • Contingent comprehensive insurance and collision insurance, which can be claimed up to the actual value of your car with a $2,500 deductible
  • Uninsured motorist bodily injury insurance

Based on these policies provided by Uber, one can see that they ensure both their drivers and passengers are cared for when it comes to car insurance. The company Lyft also provides very similar insurance for their drivers and passengers. However, there is an additional step you can take to make sure you have as much coverage as possible.

Rideshare Insurance

Rideshare insurance can be added to most existing car insurance policies. Rideshare insurance provides full bodily injury and liability insurance for any duration of a rideshare trip that is not covered by the company you are driving for. Failing to secure this additional insurance could result in the loss of your current auto insurance, higher premiums for your current coverage, and the responsibility of any repairs in the event of a car accident.

Rideshare insurance is divided into three different periods. These driving periods are:

  • Period 1: logged into the rideshare app and awaiting a ride request
  • Period 2: logged into the rideshare app and driving to pick up a ride request
  • Period 3: logged into the rideshare app and transporting a customer

Most companies, such as Uber and Lyft, provide coverage for periods 2 and 3, but not for period 1. This is where rideshare insurance comes in and provides coverage. If you are involved in an accident during period 1, you will only be covered partially or not covered at all by the rideshare company. There are three main choices when it comes to securing rideshare insurance:

  • Only covering period 1: Some car insurance companies have decided to start offering insurance addendums specifically for rideshare drivers designed to cover specifically the time spent on the job that is not covered by the rideshare company. This is a special coverage option, and some states do not have this coverage yet.
  • Commercial vehicle insurance: If you live in a state that does not provide insurance options specifically for rideshare drivers, you can get some peace of mind through commercial vehicle insurance. It provides double insurance in the case of an accident; however, it is very expensive (upwards of $500 monthly) and defeats the purpose of working for a rideshare company for most drivers.
  • A policy that is friendly to rideshare drivers: These are policies that will include a rideshare endorsement, however, they do not provide gap insurance. This policy is best suited for drivers who remain in one spot during period 1 of rideshare driving because they do not have to pay for additional, unnecessary coverage, but also don’t have to worry about their insurance being canceled.

Ultimately, it is wise to consider a form of rideshare coverage if you decide to start driving for a rideshare company. It can save you a lot of headaches and provide you and your passengers with peace of mind because it will prevent you from becoming liable for your passengers in the event of an accident.

Contact an Attorney Today

If you have been involved in an accident while driving for a rideshare company and are seeking legal counsel, contact Martin A. Kron & Associates, P.C. today. We take time to educate our clients about the potential timelines of their case and any challenges they might face during their case because we believe that preparation is key to making informed decisions. With over 30 years of experience and training from the New York State Department of Motor Vehicles, our firm prides itself on providing reasonable promises and honest advice. We can be reached at (212) 235-1525 or via the contact page on our website.

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