Does Uber Insurance Cover the Customer?
August 18, 2022
Ridesharing has become very popular in recent years, and for a good reason. Driving for Uber or Lyft can be a great way to earn some extra cash. However, there are some financial implications you need to consider, especially when it comes to your car insurance. Most personal auto policies have some exclusions for ridesharing, so it’s important to understand these coverage gaps to ensure you are fully protected. Before starting to pick up passengers, read on for all you need to know about ridesharing apps and your auto insurance.
What Does Personal Auto Insurance Cover?
To understand the coverage gaps that exist with ridesharing, you must first know what your personal auto policy covers and excludes. You may already be familiar with standard auto coverages provided by personal lines policies. While these can vary by province, the following are the basic coverages typically offered by most carriers:
- Bodily Injury- Bodily injury coverage pays for damage you cause to another person. The limits are usually specified on a per person and per accident basis.
- Property Damage- This coverage pays for damage you cause to another object or vehicle.
- Uninsured Motorist Bodily Injury (UMBI)- Uninsured motorist bodily injury pays for damages to you or anyone in your car if someone without insurance injures you.
- Uninsured Motorist Property Damage (UMPD)- This coverage pays for damage to your car if someone without insurance hits you.
Some optional coverages may also be offered, such as the following:
- Medical Payments- Medical coverage pays for injuries you can incur due to an accident, regardless of who is at fault.
- Comprehensive (Other than Collision)- This coverage will pay for damage to your vehicle if it is involved in events such as a fire, theft, vandalism, or collision with an animal.
- Collison- Collision coverage will pay for damage to your car if you are involved in an accident and your vehicle gets damaged.
What Does Personal Auto Insurance Exclude?
Many insurance policies will expressly exclude coverage for cars being used to transport people or goods for a fee. Since this definition can include ridesharing, your insurance company can potentially deny a claim if you drive for Uber or Lyft and get into an accident. Some companies will insure you but will not cover accidents where ridesharing occurred, while others may refuse to insure you entirely. You must know exactly how your insurance company will handle this type of exposure. Call your insurance broker to confirm how your company handles ridesharing before you start driving.
Uber and Lyft Insurance
Fortunately, Uber and Lyft do provide some coverage for their drivers in the event of an accident. However, it can be limited and the amount of coverage offered will vary depending on the province. As a rideshare driver, there are four phases of a typical shift. Each phase has a different level of coverage, as indicated below.
Phase Zero
Phase zero is when a driver is in their car but not connected to the ridesharing app. This is the phase drivers are most likely to be in majority of the time. In these cases, since there are no active ridesharing activities, your auto policy generally will cover any accidents that occur during this time.
Phase One
In phase one, a driver is now connected to the ridesharing app and waiting for a ride request. They are now officially “on the clock,” and if they are involved in an accident in this phase, Uber and Lyft both provide the following coverage:
- $1,000,000 or $2,000,000 for third-party liability, including bodily injury and property damage
- Standard accident benefits
You would be responsible for paying the difference if your damages exceed these amounts. Neither Uber nor Lyft includes any collision or comprehensive coverage for your car unless you already carry it on your personal auto policy. These coverages are also subject to a $1,000 deductible.
Phase Two
Once a driver gets a request for a ride and is en route to pick up a passenger, they enter phase two. If an accident occurs during this time, Uber and Lyft will provide up to $1,000,000 or $2,000,000 in third-party liability, depending on the province, and some standard accident benefits may apply. Comprehensive and collision coverages will also be provided by Uber or Lyft, as long as you carry the coverage on your auto, but are subject to a $1,000 deductible.
Phase Three
Finally, in phase three, a driver is actively transporting a driver to their destination. Uber and Lyft provide $1,000,000 or $2,000,000 for third-party liability and standard accident benefits in this phase. Similar to phase two, comprehensive and collision coverages are only offered if the driver already carries these coverages and is subject to a $1,000 deductible.
Coverage Gaps
Understanding the coverage provided by both personal auto policies and Uber and Lyft, you may see coverage gaps. Because the coverage can vary by province, you can potentially be covered less than what you carry on your underlying auto policy. If you have $2,000,000 in liability on your auto but are ridesharing in Quebec, you are only covered up to $1,000,000 in coverage, leaving you with a potential gap of $1,000,000.
Additionally, if you carry anything less than a $1,000 deductible for comprehensive and collision, you will have to pay more out of pocket in ridesharing accidents.
Rideshare Insurance
Now that you know of the coverages provided by each policy, what can you do to fill in the coverage gaps? Consulting a licensed insurance broker is always a great place to start. Duliban Insurance Brokers have the expertise to guide you on exactly what you need to start ridesharing.
Rideshare insurance is provided by Economical and protects you from when you start your car to when you drop off your passenger. This type of policy helps eliminate any coverage gaps that exist with just traditional insurance and ensures you are not responsible for paying any damages out of pocket. Contact Duliban today for more information on how to get started with this essential policy.
