Do I Have to Let My Auto Insurance Know That I Am Driving for a Ride-share Company?

Mar 22, 2021 | Personal Insurance

These days, ride-sharing is becoming mainstream. It is best suited to those who need a lift by just tapping on their phones and calling for a ride. It is a more convenient style of getting a taxi by using an app. With its good prospects, many drivers join ride-sharing companies in hopes of earning income. They use their own vehicle to transport people.

The problem lies in their insurance policy. Many drivers ask if they should let their auto insurance know that they’re driving for a ride-share company. It can be really worrying to think if an accident would get covered while you’re ride-sharing. What happens if you get into an accident and find out that you’re not covered? It would be devastating.

To make sure that everything is clear, it is best to let the insurance provider know that you are driving for a ride-share company. They will know what to do and what policy they should write for you. You may encounter the term ride-share insurance upon informing them. What’s this type of coverage for?

What is ride-share insurance?

Ride-share coverage is a necessity if you are ride-sharing. Driving for such purposes includes risk. You have your personal auto policy. However, it doesn’t usually cover any damages and injuries sustained while ride-sharing. In some cases, your insurer may cancel your auto policy if they find out you’re ride-sharing without informing them.

Your ride-share company also provides liability coverage. However, that coverage doesn’t include collision and comprehensive insurance, or other coverages that will cover specific situations. If you hit an animal while you are driving, then the repairs may not get by the ride-share company’s coverage.

Insurance for ride-sharing exactly solves that situation. By including this in your auto policy, your personal auto insurance may extend while you are driving for work. What are some situations where your personal auto policy ceases to provide you coverage? There are three “periods” that correspond to these situations.

  • 1: The driver logged in to the ride-sharing app but has no matched passenger.
  • 2: The driver has a matched passenger, but the passenger isn’t in the car yet.
  • 3: There is a passenger inside the vehicle already.

Which of my coverages apply?

We have talked about the periods where your auto insurance in Denver, Colorado or other US states, won’t apply. Let’s discuss which of your coverages apply to specific situations. Which one will kick in depending on some factors? Keep reading to find out!

Your ride-share app is inactive

When you are not waiting for prospective clients, your personal auto policy is the one that covers you. It’s either you are off-work or you are driving for personal reasons. As long as you are not driving your car for ride-sharing during that time, your personal policy gives you coverage.

You are waiting for a prospective client

If you are waiting to get a match, then it is the ride-share company’s insurance that covers you. Meanwhile, your ride-sharing insurance covers the following.

Collision and comprehensive coverage

Collision and comprehensive coverage protect you from paying the repairs for your vehicle. If you are leasing a car or have an auto loan, your creditor will require you to have them. That’s because they want to protect their investment in your vehicle. What are the damages that these types of coverage apply to?

Collision insurance pays if you are in an auto accident or a collision. The best side of this is that it will pay regardless of whose fault it is. You will get compensation for the repair costs, minus your deductible. Deductibles are a set amount of money that you pay out-of-pocket for the insurance to kick in.

On the other hand, comprehensive coverage pays for damages made by a lot of situations. It will pay if you hit a deer. This applies when your car got damaged by a falling tree limb. Another is if the car is a victim of vandalism, and many others. Kindly take note that it will not pay for damages due to collisions. That’s the job of the other one.

While you are ride-sharing, the same amount of deductibles apply as with your personal auto policy.

Uninsured/underinsured motorist insurance

If someone who hit you has no or insufficient auto coverage, then this insurance is the right one for you. Uninsured/underinsured motorist insurance protects you from drivers who are unprotected. It will pay in case the at-fault driver can’t cover your damages. Is there any difference between the two?

Uninsured motorist coverage (UM) pays if the at-fault party doesn’t have coverage. It is illegal to drive uninsured though in most states. Still, many uninsured drivers brave their way on the road. However, driving like that may subject you to possible jail time and legal fines. It is further classified into two:

Meanwhile, underinsured motorist insurance (UIM) is protection against drivers who have insufficient coverage. Most states require their drivers to have a minimum amount of insurance. Some drivers only purchase that bare minimum, which proves to be insufficient in severe cases. This coverage will pay if the one who hit you is underinsured. 

When you drive for a ride-share company, the coverage limits are typically the same as your personal policy. However, it will only apply to the driver in general.

Supplemental coverage

There are other kinds of coverage that you may have included in your auto policy. Such can be medical payments coverage and personal injury protection. Medical payments coverage (med pay) pays for the expenses you made for medical care. It is additional insurance that you can purchase to back you up for medical payments.

Same with med pay, personal injury protection (PIP) covers the medical bills related to sustained injuries due to an accident. Another term to call it is no-fault insurance because it pays regardless of who is the perpetrator. It helps pay for essential services like house cleaning and childcare. You may get back your possible lost wages as long as you prove it. Both kinds cover funeral costs as well. 

When you drive for a client, these additional coverages may apply as well, albeit to the driver only.

You have a passenger in your car

The company that you are working for covers you for liability. Same with when you are waiting for a rider, your ride-share insurance gives coverage when you already have a passenger in your car. In some cases, it will also reimburse you for your deductible that you pay to your ride-share company.

Can I drive a commercial vehicle for ride-sharing?

What kinds of an automobile are commercial vehicles? Taxis, limousines, and other vehicles that earn you money for transporting people are such. Typically, they’re scheduled ahead of time and take a specific route. If you are a driver of such a vehicle, then you may want to use it for ride-share as well.

It is possible. However, you might need a commercial auto policy to do that. Commercial auto insurance is a collective term for the variety of coverages that protect you when you use vehicles for commercial purposes. One example of commercial car coverage is livery insurance, which covers livery services such as vehicles booked ahead of the date.

Kindly remember that ride-share coverage is not available in all states. You would have no other choice but to get commercial auto insurance to work for a ride-share company. It will cost higher than the usual policy. However, if you choose to continue, then getting it is inevitable.

Should I consider getting gap insurance?

Let’s say that you are leasing a car and want to do ride-sharing. Your ride-share company will only cover you for liability. In case your car gets totaled in an accident, it would be hard to pay off your debt if you still owe more. Total loss cars or totaled cars get considered as such if the repairs cost more than the actual cash value of the vehicle.

Gap insurance will help pay the balance remaining between what you still owe and the payout that you received. Let’s say that the actual cash value of your car is 50,000 dollars. If you owe more than that, then gap insurance will pay for the remaining amount.

How to buy ride-share coverage

This coverage is typically an add-on to your auto policy. In purchasing ride-share coverage, there are a few steps that you have to follow. 

Let your auto insurer know that you are driving for a ride-share company. 

Letting them know is basic courtesy. Otherwise, your insurer may cancel your policy if they find out. This way, you can gain a better understanding of your personal auto policy. It will also let you know if they are willing to cover you for ride-share coverage. If not, then you may consider switching providers. 

One benefit of doing this is that you’d be aware if you’re covered in case you work for a ride-share company. If you didn’t ask first, then you may find yourself in trouble if they refuse to cover you. Get a clear understanding of your policy before jumping to conclusions. Only by making sure that all is well can you have peace of mind.

Look for the coverage gaps between your auto policy and your employer’s policy.

Doing this will let you know if there are instances that you’re not covered. If you know these, then you may be able to purchase or buy coverages to supplement your policy. After all, it is best to drive worry-free knowing that everything would get covered.

Inquire if your insurance company provides ride-share coverage

Of course, asking if they do offer this coverage is a must. In case they don’t, you may have to get commercial auto coverage. However, if they do have both, try getting a quote from each and make a comparison. Choose the one that would play into your interests the best.

What should I do in case of an accident while ride-sharing?

If an accident happens, you don’t have to panic. Remember to remain calm and think clearly. Below are some things that you should do if an accident occurs.

Call the police

Calling the police is something that you should do whenever an accident happens. It is more so especially if the impact of the mishap is huge. Meanwhile, talk to the other party and get his information. Provide the necessary details such as insurance proof and license if asked by a policeman.

File a claim

Inform your insurance company in a short time. Though your ride-share company can cover you for the damages, it is best to call your insurer to cover other situations. Also, do not hide the fact that you got into an auto accident from your insurer. They will still find it out through your record. Giving false information is bad practice and may make you face some consequences.

What if I’m at-fault for an accident while ride-sharing and my passengers got injured?

The liability insurance provided by your employer will cover the costs for bodily injury and property damage up to the limits. However, the repair costs of your car, your own medical expenses, and other fees may not get covered. If you have ride-share coverage, then it will pay for these amounts.

Will my rates increase?

Your premiums will definitely increase, given that you are at-fault for the accident. It signifies that you carry a higher risk to cause an accident, thus the higher charge. In fact, your driving record and driving habits get taken into account as well in gauging the risk that you have. The higher the risk you have, the higher your premium will be.

Having an at-fault accident is a blemish in your record. One way to lower your rates again is to drive safely. Don’t make moving violations and stay away from accidents for at least three years.

Final say

People always tell us that “communication is the key.” Though that saying is old, it still holds true in the present. Do you have to let your auto insurance know that you are driving for a ride-share company? The answer is YES. Informing your insurer is the best move before anything else.

Our excellent team of experts can handle your queries anytime! At Advantage Insurance Solutions, you’ll find it worthy to invest your time with us. If you have more questions about ride-share insurance, then fire away! When it comes to coverage, you are in the best hands. Call us today!