Is There an Additional Cost if I Decide to Do Ridesharing?

Mar 24, 2021 | Business Insurance, Personal Insurance

It is enticing to drive for a rideshare company these days. This line of work is becoming more and more rampant on the road. People who need to go somewhere can just make a few taps on their smartphones to call for a lift. You might have tried this in the past too! It is truly more convenient compared to the fierce competition in hailing taxis. 

If you decide to do ridesharing, then you might worry about your insurance policy. Will it cover you while you are working for a rideshare company? If not, then will there be additional costs? There are a lot of things that you have to know before you do this kind of work. These things will range from the terms of your policy to the types of coverage that you might have to purchase.

As you read further below, we will guide you on the necessary information you should be aware of. If there are any questions left unanswered, then rest assured that you can inquire for more. Our goal is to keep you informed and ready when you do ridesharing. Hope you do well in your job!

Does my personal auto policy cover rideshare?

When you are buying your personal policy, you might ask if it extends when you do ridesharing. To tell you the truth, the answer is no. There are periods where your personal auto insurance ceases your coverage. Don’t worry! The rideshare company’s policy covers you during these periods.

  • Period 1. You are active in your rideshare app, but you don’t have a client yet.
  • Period 2. You already have a matched rider, but they’re not in your vehicle.
  • Period 3. The client is already in your car.

Take note that when your rideshare app is off, your personal auto insurance covers you. That’s because you are using your car for personal purposes. When the app is on, you are using the car to earn money. Hence, it needs a different type of coverage to protect you.

What is rideshare insurance?

If you decide to do ridesharing, then you may have to know about rideshare insurance. Driving for a rideshare company without asking and clarifying things from your insurer might make things troublesome. Make sure that you’re not violating any term and condition of your insurance. Let your insurer know first that you’re going to rideshare and ask if they can cover you.

The company that you are going to drive for offers coverage too. However, it is limited to liability coverage in general. Rideshare insurance is additional coverage that you may include in your auto policy. This coverage makes it possible for your personal auto insurance to extend to ridesharing. What are these types of coverage?

Types of coverage included in your personal auto insurance that may extend to ridesharing

In purchasing insurance, you will encounter many types of coverage that you may include in your auto policy. Each one will have a specific area to cover. Auto Insurance in Denver, Colorado, like in most states, requires drivers to have a minimum amount of liability. Though that is the only one mandated, purchasing additional coverage increases your protection.

You might have heard of the term basic auto policy. This one consists of liability, collision, comprehensive, uninsured/underinsured motorist, and personal injury protection coverage. These are the usual types of protection included in an auto policy. You can find out below the types of coverage that may extend when you do ridesharing.

Collision and comprehensive coverage

Your car repairs won’t be paid for by your insurance unless you have other coverages. These coverages can be divided into two: collision and comprehensive. They are distinct from each other based on the situations that they cover. Kindly take note that it will only pay for car damages and not your medical bills.

Collision coverage gives a payout if your car gets wrecked in a crash. Knowing the at-fault driver doesn’t matter. As long as you make a claim and pay your deductible, it will reimburse you. Deductibles are a fixed amount of money that you pay for your coverage to kick in. It is an out-of-pocket expense that you’ll find better to pay than paying for the whole car repairs.

On the other hand, comprehensive coverage covers a lot of situations, but not a collision. It may cover you when your car got damaged when you hit an animal, a tree fell on it, got vandalized, and many others. Same with collision insurance, you’d have to pay a deductible to receive a payout.

Personal injury protection (PIP)

Regarding medical expenses, personal injury protection is the right one for you. It will pay for medical care, funeral costs, pain, suffering, and even lost wages. While you are injured, it may pay for essential services like childcare and house cleaning. No-fault insurance is another way to call it. That’s because it will pay no matter who caused the accident. Some states may require it depending on their auto insurance laws. 

Personal injury protection vs medical payments coverage

Another type of coverage that handles fees related to medical care is medical payments coverage. It will pay for funeral costs and medical expenses. The downside though is that it won’t reimburse you for lost income. It won’t pay for your living expenses too while you’re injured.

Do I need PIP coverage if I have health insurance?

Medical treatment related to auto accidents may be paid for by your health insurance. Nonetheless, the need for personal injury protection may depend on the state’s laws. One perk of having PIP is that you won’t need to pay a deductible. It will kick in no matter what. In insurance for health, that isn’t the case.

You’ll have to pay a deductible for health insurance to cover you in general. In case you receive reimbursements from PIP or medical payments coverage, they will be eligible to have it. That’s because most health insurance policies have a subrogation clause. They are entitled to payouts regarding medical expenses.

Uninsured/underinsured motorist coverage (UM/UIM)

In the instance of accidents, you can never tell which car would hit you. One out of eight drivers on the road is uninsured. Meaning, if they hit you, they won’t have coverage to pay for them. Your car repairs might not be done. Worse, you won’t be reimbursed for your medical payments. To protect yourself from that, uninsured/underinsured motorist coverage is a must-have.

To clarify things, let’s divide this coverage into two. Uninsured motorist coverage pays if the one who hit you has no insurance at all. It will pay for both bodily injuries and property damages. Meanwhile, underinsured motorist coverage pays if their insurance is insufficient to cover all the costs. It might be because they only have the minimum coverage, which isn’t enough.

Does rideshare insurance cover liability?

Among the types of coverage, liability insurance is a requirement in almost every state. However, rideshare insurance won’t cover liability. Driving without one is illegal and you may face legal consequences. Don’t worry! In case you are at fault for an accident, the coverage provided by the rideshare company that you are working for will cover you.

Let’s understand it better. Liability coverage pays for the damages and medical bills of the victim in case you are liable for a car accident. This protects you from paying for the other party’s bills right out of your pocket.

Kindly remember that it won’t pay for any of your expenses. Let’s clarify what expenses are covered by this insurance. There are two types of liability: one for bodily injury and one for property damage. Bodily injury liability pays for the fees related to medical care. If the other driver got injured, then this will pay for their medical treatment.

Property damage liability, on the other hand, handles the payments regarding properties. The repairs needed to rehabilitate the damages would be paid for by this coverage. For instance, the victim’s car got wrecked. Your property damage liability will pay for its repairs. It will pay up to your policy’s limits.

How much liability coverage do I need?

The amount of coverage required by each state varies. Liability coverage limits in Denver, CO requires their drivers to have:

  • For bodily injury. The minimum amount is 25,000 dollars per person and 50,000 dollars per accident.
  • For property damage. Drivers are required to have at least 15,000 dollars per accident.

Here’s a tip: purchase more coverage than what is needed. It is recommended that you have a higher coverage level to make sure that everything gets covered. Otherwise, any excess amount that isn’t paid for by your insurance would be paid by you. 

What does rideshare insurance cover?

This insurance mainly covers the same situations as a basic auto policy does. Your rideshare company handles liability coverage, so you only have to worry about other coverages. Depending on the period that you are driving, then your coverage may shift. Keep reading to know the types of coverage that rideshare insurance applies to.

  • Collision and comprehensive. Same as your personal policy, these coverages require the same deductibles.
  • Uninsured/underinsured motorist. Rideshare insurance extends UM/UIM coverage when you are driving for a rideshare passenger. Kindly take note that UM/UIM insurance applies to the driver only during this period.
  • Additional protection. If you have personal injury protection and medical payments coverage, then they will also extend when you rideshare. Same as UM/UIM coverage, it only applies to the driver.

Cost 

The average cost of rideshare insurance lands between the cost of a traditional auto policy and commercial insurance. The prices may range from 10 dollars a month to almost twice the cost of a traditional policy. Remember that it is additional coverage. You may adjust your coverage levels on collision and comprehensive to lower your rates if needed.

Is there an alternative if rideshare coverage is not available in my state?

Rideshare coverage isn’t available in every state. However, to rideshare, you would need to have insurance first. An alternative that you can purchase is commercial auto insurance. It covers liability and physical damages when you are using your vehicle/s for commercial purposes.

This applies to ridesharing as well since it is a way to earn money. In case you want to drive limousines and taxis for rideshare, then this coverage is perfect for you. As a matter of fact, this insurance is mainly associated with trucks. However, it applies to regular cars in the case where they’re used for business purposes or earning income.

What does commercial auto insurance cover?

Commercial auto insurance can basically cover everything that personal auto insurance does. The difference is that this one covers you when you use vehicles for earning money. On the other hand, your personal auto policy protects you when you drive for personal use. There are many other coverages that commercial auto policy includes.

  • Roadside Assistance. These cases include getting locked out of your car, your battery is dead, or the tires are flat. Commercial auto policy will cover you for roadside assistance in case these happen.
  • New car replacement.  If you suffer from a total loss, this will replace your car. It also gives gap insurance for any remaining balances between what you owe and the car’s actual cash value.
  • Loan/lease coverage. After a total loss, you will be reimbursed for the actual cash value of your car. If you still owe more than what you received, then this one covers the remaining amount.
  • Expanded towing. This covers you for towing fees beyond the coverage of your basic business auto policy. It may cover towing, jump starts, and roadside repairs.
  • Rental car reimbursement. If you get into an accident, then it will take time for your car to get repaired. During this period, you might need to rent a car to go places. This covers the transportation fees that you may spend.

Final Say

Is there an additional cost if you decide to do ridesharing? There certainly is. However, paying for something greater is surely worth it. Remember that it is best to make things clear and ask your insurer first. This way, you won’t violate any rule and you can make sure that you are covered. 

The experts of Advantage Insurance Solutions got your back! Get insured with us and be free of worries while ride-sharing. An excellent team gives excellent service. That’s what we give our clients over the years. For more questions, call us today!