It’s summertime and you want to earn extra money for your upcoming family vacation or pay down some bills. After researching several options, you decide that driving for Uber or Lyft works best. You have the flexibility to schedule pick-ups when it’s convenient for you, the pay is decent, and you already have a smartphone and a car. You sign up to be a driver and are ready to go. What could be easier?
But, wait…did you check with your insurance agent to let them know you are driving for Uber or Lyft?
While this is an easy way to earn some extra money on the side, you may have a gap in coverage – and a huge liability – if you don’t have the correct insurance in place.
Did you know that most insurance carriers will not provide coverage from the moment you accept a ride on the Uber or Lyft app because you are driving for financial gain? If you do not have the right coverage in place, your personal auto policy could even be cancelled for violating the terms and conditions – leaving you without coverage for the damage, and a hefty price to pay.
Here’s the low-down on coverage. Uber and Lyft are called Transportation Network Companies (TNCs), and they provide specific levels of coverage at different periods (or “phases”) of your work for them. It is important that you understand where your personal insurance ends and when the Uber or Lyft insurance coverage begins. Knowing where there are gaps in coverage – and getting the correct insurance rider in place to fill that gap – will save you financial headaches in case you’re involved in an accident.
Here are the four phases of coverage:
- Period 0: Your app is turned off – your personal auto policy is in effect and provides coverage.
- Period 1: Your app is on, and you’re waiting for a ride request. Your personal auto policy will not cover you during this phase, unless you have added ride sharing coverage. Your Uber or Lyft insurance (employer’s ride share coverage) only provides liability coverage.
- Period 2: You accepted a ride request and are en route to the passenger. Your employer’s ride share coverage is in force.
- Period 3: Passengers are in your vehicle. Your employer’s ride share coverage is in force.
The best way to reduce your liability is to purchase a Ride share Endorsement for your existing auto insurance policy. This extra coverage is inexpensive and prevents coverage gaps; keeping you fully insured.
If you are considering driving for a TNC, it is important to read the small print about what is covered – and when. Driving for a ride share company doesn’t have to be complicated if you take the steps ahead of time to talk to your insurance company about your plans and put the appropriate ride share endorsement in place.