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For many people, ridesharing apps like Uber or Lyft seem like an easy way to make some extra money. Almost anyone with a car and a smartphone can become a driver for one of these apps and start picking up riders. This new evolution of the taxi service seems simple and streamlined on the surface, but the issue of insurance is a complication that potential drivers should be aware of before signing up with Uber.

Taxi vs. rideshare

Apps like Uber and Lyft seem to be primed to replace taxis, but how much do these services really have in common? The apps argue that they are networks or even “communities,” and therefore should not be regulated by the same laws that taxi companies must abide by. Uber has even tried to argue that it is not a transportation company at all, but a technology company leasing the Uber app to transportation service providers. In many areas, the regulation of rideshare apps has been uneven and more like a game of catch-up, trying to put laws in place after drivers have already started operating in the city.

Liability for rideshare drivers

Because ridesharing apps are reluctant to accept liability, the question of car insurance for rideshare drivers is a complicated one. Much of the burden of liability falls on the driver’s personal car insurance since they are driving their personal vehicles; drivers may feel safe, believing that they are covered, without realizing that their personal insurance may not cover an accident that occurs while driving for a ride-sharing service.

Although apps like Lyft talk about “community” and call drivers “your friend with a car,” insurance companies consider driving for these services a commercial activity. Commercial activity is not covered under most personal car insurance. In fact, insurance companies have canceled personal car insurance policies or refuse to renew policies after discovering that the policy holder has used their vehicle for commercial purposes.

Uber’s insurance covers drivers while they are giving a ride, and drivers must rely on their personal insurance when they are not active in the app. This produces a gap – who is liable for an accident that occurs when the driver is active but does not have a passenger in the car? For example, consider the period of time after the driver has accepted a new passenger while they are on the way to pick up the fare. This driver is arguably working, but according to Uber, they are not liable if a passenger is not present.

Rideshare insurance

Taking out a full commercial policy is prohibitively expensive for most part-time rideshare drivers. It took some time for insurance companies to catch up with the quickly developing ridesharing economy, but there are now options available from many insurance companies for rideshare drivers. Some of these policies are modified commercial policies that will replace your current personal car insurance policy, while others are specially written to cover the “gap” described above. These are usually treated as add-ons to your current personal policy and are a much more affordable option.

Personal Injury Attorney Rockville

Insurance companies offering rideshare insurance to drivers in Maryland include Geico, USAA, Farmers, and Allstate. Geico offers a hybrid commercial and personal policy for ridesharing drivers that provide full coverage during personal use as well as while transporting passengers. This policy is estimated at approximately three times the cost of a personal insurance policy from Geico. USAA members have the quick and affordable option of adding a ridesharing “endorsement” to their existing personal policy to fill the gap in coverage for as little as $6 per month. Farmers also covers the gap period for an average 25% increase over a standard personal car insurance policy. The Allstate Ride for Hire policy costs just an additional $15-30 each year on top of a personal policy.

Driving for a ridesharing app can be a quick, casual way to make extra money using only what you already own: your car. But in order to make sure you and any potential passengers are safe, it is crucial to ensure insurance appropriately covers you in the event of an accident. Companies like Uber have shown in past cases that they will fight to limit their own liability whenever possible – protect yourself with ridesharing insurance.


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