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  • Writer's pictureAnna Tang

Mainor Wirth 2020 Scholarship Essay: What is Rideshare Insurance?



In rideshare accidents, drivers and passengers are afforded various levels of insurance coverage depending on who is at fault for the crash and the status of the rideshare vehicle involved. At least a portion of your essay should explain how rideshare insurance works, the amount of coverage available, and the damages that may be recoverable.


While ridesharing has always existed in the form of carpooling and taxi services, the advent of companies like Uber and Lyft has revolutionized the way we rideshare. It has allowed us the freedom to request a ride from virtually anywhere through our phones, and has become an integral part of our modern travel lives. Simultaneously as these companies introduced a form of ridesharing provided for and by the masses, they created a microcosm of auto insurance dedicated to drivers of this service: rideshare insurance.


The purpose of rideshare insurance is simple: to ensure that a driver is protected when they provide ridesharing services for a company. While ride-sharing companies automatically enlist the minimal insurance necessary for drivers, these policies are not in effect the entire duration of a ridesharing route. Thus, it may be a smart move for drivers to obtain additional rideshare coverages from their personal auto insurer. Because ridesharing classifies as a “business use” of a vehicle (Norman), it is typically excluded from the protections of a personal insurance policy unless otherwise negotiated. Drivers can usually ask to add the coverages that they lack under the company rideshare policy at a reasonable price.


The amount of coverage provided by Uber and Lyft is contingent on the “period” that the driver’s activity falls under. According to Farmers RIdeshare, there are four distinct periods: Period 0, Period 1, Period 2, and Period 3. During Period 0, the driver is not engaged in ridesharing services. Their rideshare app is turned off, and accidents are covered by personal auto policies. Company policy has no effect in Period 0. During Period 1, the driver is engaged with the rideshare app and is waiting for a ticket, but has not yet accepted a request. In this period, Uber and Lyft both provide limited liability coverage of 50,000 bodily injury per person, 100,000 bodily injury per accident, and 25,000 property damage per accident, all of which are subject to adjustments based on the state statutes (Norman). However, upon closer inspection of this policy, drivers may discover that Uber and Lyft only cover liabilities. So, if a driver is at-fault for an accident, Uber and Lyft’s coverages come into effect after the driver has exhausted the limit paid by their personal insurance, or if the driver’s claim is denied. Even then, only the damages owed to the other party are covered up to the aforementioned amounts; the driver is not covered. In practice, this may translate to the driver paying out-of-pocket for damages done to their own vehicle or person. In the opposite scenario, if the other party is responsible for the accident, the driver is covered by the liability of the other party’s insurance plan up to a certain amount that fluctuates by state. If the other party happens to be uninsured or underinsured, Uber and Lyft do not cover the expenses of the driver, and the driver’s personal insurance may deny the claim in the absence of rideshare coverage. Hence, it is in scenarios like these where additional comprehensive and collision rideshare coverage come into use.


During Periods 2 and 3, the driver is fully covered by the rideshare company’s policy. A driver is in Period 2 when they have accepted a request and are in the process of picking passengers. A driver is in Period 3 after passengers have entered their car. NerdWallet cites the amount covered by Uber and Lyft in both Periods 2 and 3 to be as follows: $1 million per accident in liability protection and comprehensive and collision coverage up to the value of the vehicle (only if the driver has comprehensive and collision coverage on their personal policy). Uber and Lyft also have deductibles implemented of $1000 and $2500, respectively. Thus, in a situation where a driver is at-fault for an accident during Periods 2 or 3, Uber and Lyft pay up to the agreed amounts of $1 million to the other party plus the value of the vehicle to the driver, minus the deductible. If it is the other party who is at-fault for the accident, then the other party’s coverage pays up to the liability limit, and Uber and Lyft shoulder the rest.


It is also notable that some delivery app services such as Postmates, Doordash, and Uber Eats also offer rideshare insurance for delivery drivers, in part due to the similar nature of delivery and ridesharing programs. The rideshare insurances of these delivery apps follow the basic structure, dividing driver activity and coverages into periods of 0, 1, 2, and 3. In these insurances, the role of passengers is replaced with foods and goods, and the amount of coverage is less standardized than that of ridesharing apps, with each company establishing their individual coverages. The most generous delivery app rideshare insurance belongs to Uber Eats: the Uber Eats insurance model mirrors the regular Uber coverages of $50,000 bodily injury per person, $100,000 bodily injury per accident, and $25,000 property damage per accident during Period 1, and $1 million in liability per accident with comprehensive an collision during Periods 2 and 3. In comparison, DoorDash offers the least coverage with no coverage until Period 3, during which they insure $1 million in liability per accident. In the middle of the spectrum is Postmates, who provides no coverage during Period 1 and $1 million in liability per accident during Periods 2 and 3 (Norman). In the coverages provided by DoorDash and Postmates, the driver is again only covered for liabilities, the damages done to others but not to themselves.


In circumstances of limited coverage or no coverage at all, such as during Period 1 or on some delivery app rideshare policies, drivers can opt to add rideshare coverage onto their personal auto policy for an additional charge. Depending on the coverages wanted by the driver and the rates of insurance company, the added price can range from $9 a month at Erie to $27 a month at Mercury (Norman). However, drivers should be aware that the availability of rideshare coverage tends to be inconsistent; it is not offered by auto insurers in some states. In areas where rideshare coverage is not offered, a commercial auto insurance plan may be the best plan to protect themselves and others (Reddigari).


After an accident during Uber or Lyft hours, a driver may be eligible for recoverable damages. Costs associated with pain and suffering, medical bills, damaged property, and loss of income or earning capacity may satisfy the conditions to receive compensation. Examples of circumstances that may warrant compensation include lost income from missed days of work due to an injury, emotional distress or anguish, items being damaged from an accident, and medical expenses (“How to Recover Compensation From Uber and Lyft Accidents.”). It must be noted that while drivers may be able to receive some compensation, they may also have to spend on attorney fees, missed days of work to attend court, and etc. Furthermore, the driver must be aware that there are three parties who may be responsible for the recoverable damages: their personal insurer, the other party’s insurer, and Uber or Lyft (Sharma). While usually the at-fault party’s insurer foots the bill, that may not always be the case.


Although the process of rideshare insurance may seem convoluted, it is necessary for drivers to understand the policy that protects them on the road. It is the drivers who make ridesharing the feasible and accessible service that it is today. It is they who save us during sudden downpours and storms. It is they who help us during dark nights and suspicious alleyways. It is imperative that we establish transparency regarding rideshare insurance to keep up the positive good that is ridesharing.

Works Cited


Farmers Rideshare Chart, www.farmers.com/rideshare/.

“How to Recover Compensation From Uber and Lyft Accidents.” How to Recover Compensation from Uber and Lyft Accidents, Grey Law, 28 May 2020, www.greylaw.com/recover-compensation-uberlyft-accident/.

Norman, Kayda. “Rideshare Insurance for Drivers: Where to Buy It, What It Covers.” NerdWallet, 1 June 2020, www.nerdwallet.com/blog/insurance/best-ridesharing-insurance/.

Reddigari, Manasa. Do I Need Rideshare Insurance If I Drive for Uber or Lyft? 4 Sept. 2018, www.microsoft.com/en-us/microsoft-365/business-insights-ideas/resources/rideshare-insurance-drive-uber-lyft.

Sharma, Mala. “Recovering Damages from Accidents Involving Uber Drivers.” American Bar Association, American Bar Association, 9 Dec. 2019, www.americanbar.org/groups/gpsolo/publications/gpsolo_ereport/2019/december-2019/recovering-damages-accidents-involving-uber-drivers/.


For more information on rideshare insurance, follow the links below:





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