What’s the difference between rideshare insurance and commercial insurance? You may have heard these two terms thrown around interchangeably, but there’s actually a big difference. I’m going to tell you what matters to you as an Uber X or a Lyft driver.
Take a look at my video that explains the important differences between rideshare and commercial insurance, and scroll to the video transcript below to see all of the points I cover.
The basic insurance requirements for Uber and Lyft drivers
In order to sign up as a rideshare driver, whether you’re with Uber or Lyft, all you actually need is a regular, personal insurance policy. That’s gonna be the same policy that anybody, you or I, anybody out on the road is supposed to have. A regular personal insurance policy.
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But the thing with Uber and Lyft is that they don’t provide coverage at all times. When you’re en route, once you accept a trip and you’re in route to a passenger, they call that Period Two, and once you’re with a passenger, they call that Period Three.
Uber and Lyft insurance doesn’t full cover you in all driving situations
During Period Two and Three, Uber and Lyft cover you with their commercial insurance policy. But if you have the app on and you haven’t gotten a request yet, that’s called Period One, or the insurance gap period, because Uber covers you at much lower limits, and they don’t provide any collision coverage.
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You get into an accident and don’t get coverage from Uber or Lyft, and your personal insurer also doesn’t want to cover you during that time, because to them you’re driving for Uber and Lyft. Personal insurers don’t want to pay insurance if you get into an accident during that period since you wouldn’t be online and driving unless you’re working for Uber and Lyft.
Rideshare insurance covers Period One
It’s a little bit of a gray area and they call it this insurance gap period, or Period One. Typically, rideshare insurance will cover that Period One gap and it is a little bit more expensive. We’ve got a big insurance place marketplace on our site where lets you sort by which state you’re in to see which options are available.
Typically what you’re gonna see is, in total, $58 to $200 a month for rideshare insurance. That’s a big range, but it does depend on your driving history and it usually is gonna be a little bit more than a personal policy. Although, in some cases, it’s actually cheaper, or in some cases, it’s about the same price.
The thing with rideshare insurance is that it’s actually contingent on you doing a ride with Uber and Lyft. If you go out and buy rideshare insurance, it’s like a normal personal insurance policy, and then the rideshare insurance portion only kicks in really during that Period One period. Think of it as a personal policy plus a rideshare endorsement.
The differences between rideshare insurance and full commercial
Commercial insurance policy is a little bit different. A commercial insurance policy is a 24/7 insurance policy that covers you and your car. All Uber Black, all Uber SUV and taxi drivers have to have this type of policy. With a commercial insurance policy, you can have multiple drivers on that vehicle. You can do rides off the app, so you could just go and give a ride to your neighbor, or a client or whatever it might be, and be covered insurance-wise.
Technically, you’d still need a taxi or a limo license to operate in your city. The final thing with the commercial insurance is that it costs about $3,000 – $5,000 a year, so it really only makes sense if you’re a full time driver doing lots of private rides. That’s hundreds of dollars a month, and so you can imagine for a part time driver, or even your typical Uber X driver who’s driving at much lower rates, it doesn’t make a lot of sense.
Commercial insurance is for drivers who want to build a private clientele
The reason why we get a lot of questions about commercial insurance versus rideshare insurance is because as you can imagine, commercial insurance doesn’t make a lot of sense financially for an Uber X driver. But there are a lot of Uber X drivers who want to do rides off the app who want to build a private clientele network and be able to do rides and provide insurance to their customers, but without having to go through Uber and Lyft.
Let’s say you’re a really great driver, or you have a nice car, or you’re super high rated and you have clients that want to get rides with you again in the future. Now, one option is you can always use a scheduling app like UZURV, or you can just do it via text message. Get your passenger’s information and then arrange for the ride through text or through a scheduling app like UZURV, which is probably what I would recommend since it makes it a lot easier.
Then you go to them and do that ride on the Uber X platform. It’s like a semi pre schedule ride because you can’t organize that with a Uber app, but you can use a third party app like UZURV to go ahead and do that. That’s one option. Then other drivers will really just do the rides, and I guess if they get into an accident they’re going to have to lie to their insurance company and obviously that’s something that I can’t really recommend. Does it happen? Yes. There are drivers who go and do rides off of the app, whether they’re taking clients from Uber, or they have clients in their area and they’re basically just going and being a private driver, but without the commercial insurance and without the taxi and limo license.
I think it’s gonna be pretty tough to get caught because there aren’t exactly stings going after this. Does it happen? Yes. But at the same time it is technically illegal. I do hope in the future there will be some type of paid per ride type commercial insurance product. That way, if you have some clients that really enjoy your services and you want to do a ride off the app, you could go to them and say, “Hey, I can do this ride, it’s gonna cost this amount, and I have commercial insurance, too, so then you’re covered insurance-wise.” That’s really the big risk in a lot of these situations. You don’t want to get into an accident off of the platform and then have to lie to your personal insurance company.
Which type of insurance should Uber drivers get, rideshare or commercial?
If you’re an Uber X or Lyft driver, you’re almost always going to want to go for rideshare insurance. If you’re doing Uber BlacK or you’re more of a professional driver, or just have a ton of private clients, you’re gonna want to go for commercial insurance. If you’re going for commercial insurance, you’re gonna need to find an insurance broker who will get you quotes on your behalf. We have a listing on our site of a good commercial insurance broker in New York. There are a lot of people in New York that need commercial insurance, because New York City requires that.
If you are an Uber X driver, you will want to go for the rideshare insurance, and we have a rideshare insurance marketplace on our site where you can learn more about that and also find a super knowledgeable local agent in your area and just see which companies are in your area so you can compare prices and get the best deal. Hopefully that clarifies the commercial insurance versus rideshare insurance. If you do have any questions, feel free and let me know in the comments below. If you like this video, let me know, give us a like. Give it a thumbs up, and feel free to subscribe to the channel if you want to see more videos in the future.
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