Insurance as a Rideshare Driver: What You Need to Know

Rideshare services work wonderfully as ways for people to make a little extra cash during their downtime. Anyone that owns a reliable vehicle and has a pleasant attitude and a clean driving record can earn a reasonable income. The problems arise when drivers forget about their auto insurance needs. Here is what all rideshare drivers should know.

Insurance Gap Concerns

Independent contractors, like rideshare drivers, have a legal responsibility to cover their personal insurance needs. The leading rideshare companies now offer some insurance coverage to protect their drivers, but it is not as complete as people may think.  Small, startup rideshare services may offer their drivers no insurance options.

The worry is over what experts call a gap with rideshare coverage. Personal insurance companies believe if the driver has their rideshare app on or is engaged in soliciting fares, they are working for the company so their private insurance does not apply. Rideshare companies provide coverage only when a driver is actively working with their app on.

For example, someone hails a passing rideshare driver who has their app off. The driver pulls over to pick up the client but hits a parked car or bumps into the back of the car in front of them. The incident creates a difficult situation where the driver could be uninsured for any damages that occur.  

The rideshare company refuses to cover the accident because the driver had the app off. The private insurer also refuses the claim because the driver was technically using their car for business purposes. Any claim that happens while using a vehicle for business cannot go on a personal policy.

Studies reveal that rideshare drivers may lack the coverage they need to fill the gap. Any incident that occurs could leave them with no help to fix their vehicle or pay for any damage they cause to another vehicle or private property. If they injure someone, they could even face a civil lawsuit without insurance.

Honesty Works Best

Some drivers do not notify their insurers of their part-time job to avoid the cost of insurance. An insurance company may still discover the secret if an accident occurs. A failure to notify the company could lead to an increase in premiums, a refusal of any claims, or a cancellation of the policy if the insurer chooses.

Police officers may need to view personal insurance information at the scene of an accident even if the rideshare coverage would apply. The insurer for any other vehicles or people involved may contact the driver's insurance company. Most people will have fewer complications and coverage delays if their insurer knows the truth beforehand.  

Commercial Options Available

Part-time drivers that buy rideshare coverage from their insurance company will usually have adequate coverage regardless of the situation. The rideshare company covers their insurance needs when the driver has their app turned on and the personal policy handles the rest. Busy drivers, however, may need more.