Uber insurance explained

      No Comments on Uber insurance explained

In the excitement to get out on the road and start banking cash, many Uber drivers overlook one important component of the ridesharing equation: insurance.

This can end up being a very expensive mistake.

Uber insurance covers you for liability, but only part of the time. Uber insurance covers you for comprehensive and collision, but only part of the time – and only if you have that coverage on your personal policy already.

What you need to know ridesharing and insurance

You’ll need to start with a commercial car insurance policy or a personal car insurance policy that is rideshare-friendly — that is, it covers you even when you are working. Most don’t.

Uber’s insurance doesn’t cover you at all when its app is closed. You need your own personal auto policy for those times.

When the app is open, Uber’s coverage applies in some circumstances, and your own rideshare-friendly policy in others. There are three “periods” in the rideshare world, according to insurers:

When you have an accident (and the odds of an accident grow the more miles you rack up), you’ll need to know which insurance company should pay the bills for that period.

If you report an accident to Uber, your account won’t be reactivated until Uber has cleared your car for return.

The proof of insurance provided by your personal auto policy should be sufficient in case of an accident.

What Uber insurance covers

Uber offers its drivers some liability protection, but coverage levels vary dramatically depending on whether you have a rider or not. Collision and comprehensive can be especially tricky. And your own injuries are never covered unless someone else is at fault.

Here is a quick rundown of Uber coverage levels:

Requirements are different for Period 1 in states such as California and Maine, where state law takes away the contingency for liability coverage. Traditional private car insurance policies no longer apply in Period 1; you have to either buy a rideshare-friendly private policy or commercial livery coverage, or Uber must step in. Uber still won’t pay for damage to your car or your injuries if you’re at fault, and under the new state laws, your personal car insurance doesn’t have to, either, unless you’ve bought rideshare-specific coverage.

Insurance coverage during Periods 2 and 3: Your liability is well-covered, but collision and comprehensive get a bit complicated.

What we recommend for rideshare drivers

There are three types of insurance you absolutely should have, in addition to a rideshare endorsement, and a couple that should at least be on your radar.

Liability: Liability insurance is mandatory in every state. It covers injuries to another person or damage to their property due to an accident you cause. Liability will never cover your own car or your own injuries. Some states have very low limits; for example, California requires just $5,000 for property damage – and most cars you might hit are worth more than that. You’d have to pay anything over your limit. Additional liability coverage (most experts suggest 100/300/50 for homeowners with savings) is generally quite inexpensive.

Collision/comprehensive:  These coverages are not mandatory in any state. If you have a loan on your vehicle, your lender typically requires them. Collision will pay to repair or replace your vehicle if it is damaged in an accident with another vehicle or stationary object. Comprehensive covers vehicle damages that are not caused by a collision such as hail, fire, vandalism or animal strike. Resist the temptation to drop collision and comprehensive unless you can write a check for another vehicle. Keep an amount equal to your deductible in savings. A majority of drivers choose $500 as their deductible.

Uninsured/underinsured motorist: Some states require this coverage, and others allow you to reject it. Don’t. If you are in an accident and the other driver is at fault but doesn’t have car insurance, uninsured motorist covers your injury-related medical expenses and those of your passengers. It can cover your lost wages and pain and suffering. If the driver who hit you has insurance, but low limits, underinsured coverage will cover the difference. Choose coverage amounts that match your own liability limits.

You should also consider:

Gap coverage: You’re putting a lot of miles on a newer car; your insurance company will pay only the actual cash value of your car if it’s totaled, not what you owe to the bank. Gap covers the difference.

Medical payments: This insurance covers the cost of medical expenses that are associated with car accidents, including the deductible on your health insurance if you have it. If you don’t have health insurance, a medical payments policy is very, very good idea.

Leave a Reply