There’s a big question I hear from many drivers all the time about rideshare insurance: “Can I cancel my auto insurance policy and switch to ride share insurance at any time?”
Watch my video to see the answer, then read the transcript below if you prefer to read.
Summing up the rideshare insurance issues
As you guys know insurance for ride share drivers is a bit of a complicated issue. To sum it up kind of quickly, your personal policy won’t cover you when you’re sitting around with the app on waiting for a fare. Most personal insurance companies won’t cover you in that situation, called Period 1.
You do have coverage from Uber and Lyft at lower liability limits during Period 2 and 3, which is once you’re in route to a passenger and once you have a passenger in the car.
The risk for drivers is during that Period 1 time. If you don’t have rideshare-friendly insurance, you’re covered by Uber and Lyft at lower liability limits, but you don’t have any collision coverage. If you get into an accident during that time, you’re not going to be covered by anyone. Not your personal insurer and not Uber and Lyft for damage to your car.
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In any accident I’ve ever been into, there’s been damage to my car. So collision is something that’s pretty necessary, especially if you have a newer car.
Rideshare policies can fill in the coverage gaps
Luckily there are more and more rideshare-friendly options every single day. The pricing is actually super competitive with regular personal insurance, because all you really need is these companies to say, “Hey, we’re not going to drop you for being a ride share driver.” Which doesn’t cost them anything. Then they also need to cover you during this Period 1.
For a lot of drivers you’re sitting there parked on the side of the road. So the risk isn’t super high. But there is some risk if you start driving around, even if it’s only five minutes. You get hit during that time you have no collision coverage, now you have to pay for all the damage to your car. Which obviously would suck.
How much more is rideshare insurance?
Some drivers that I’ve talked to have even gotten lower rates. Obviously that’s not gonna be the typical case if you go out and switch to ride share insurance. It should only be 5 to 10% more than what you currently pay. This is gonna vary a lot depending on your driving record, and which companies you go with.
In a place like California, where there’s now seven different options, some drivers switched from regular providers like Geico and they actually are able to save money. Which is a pretty cool thing.
Do you need to pay out your current policy to switch?
The thing that most people actually don’t realize is that you actually don’t need to wait until you’re premium is paid out on your personal policy. Normally insurance companies might require a three month payment, or a six month payment. If you do month to month they might charge more, so most people pay six months. My policy is every six months.
If you do have personal insurance and you’re on a six month policy, for example, you actually don’t have to wait till that six months is over to cancel your policy. You can cancel it today with most companies and get a prorated refund. So if you have three months left, lets say you’re three months into your six month contract and you paid $500. They’ll send you $250 back in the form of a check. Then you can go and switch to rideshare-friendly insurance today.
I think that it’s a no brainer to at least go and get a quote. I verified that you could cancel your personal insurance and switch to ride share insurance, and still get that prorated refund. I verified that with one of my State Farm agents that’s on our insurance options database in California. You may have a company that doesn’t allow that or maybe they required a prepayment in full. In that case you’d probably have to wait or look into other options, but almost every company will allow you to cancel your policy at anytime.
I’ve done this in the past. A few years ago I found a cheaper quote from someone else, so I canceled my policy that day and they sent me a prorated refund. I switched to the new company and saved $100. It’s definitely easy to do, and these companies definitely make it easy to go out and get a quote. Especially if you have multiple options in your state.
Why is this important?
The reason why it’s important for rideshare drivers is that if you’re waiting for it to expire to get ride share insurance you’re putting yourself at risk. Not only are you putting yourself at risk that your insurance company is going to somehow find out that you’re a ride share driver and drop you, which is never a good thing. You’re also putting yourself at unnecessary risk that if you get into an accident during that period one, that you’re not going to have collision coverage from your personal insurer or Uber or Lyft.
Check out our detailed rideshare insurance database
It’s definitely something that you want to look into and at least get a quote. We’ve got a database of rideshare-friendly insurance options that’s super organized. It lists it all out by state, because obviously Geico might be in California, and State Farm might be in California as options but they might not be in every single state. We have it listed out by state, and all the options that are available to you by state and if you have any questions we also work with a few agents who really understand rideshare insurance and will be more than happy to answer any questions that you might have. So definitely check that out.
Hopefully you guys enjoyed this video. Feel free to like, comment or subscribe. Take care.
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