The 8 Biggest Insurance Mistakes Rideshare Drivers Make

In the ever-expanding gig economy, rideshare driving has become a popular way for individuals to earn money. Learn these rideshare insurance mistakes and solutions to rule the road.

---

ALSO READ: Why Did My Insurance Go Up?

Services like Uber and Lyft have provided countless opportunities for flexible work, but they’ve also introduced unique challenges when it comes to insurance. Many rideshare drivers make critical insurance mistakes that could leave them financially vulnerable.

In this article, we’ll explore the eight most significant insurance mistakes rideshare drivers make, provide specific examples, back them up with statistics, and offer practical solutions to ensure drivers are adequately protected.

1. Failing to Inform Their Personal Auto Insurer

One of the most common insurance mistakes rideshare drivers make is failing to inform their personal auto insurer about their rideshare activities.

Here’s why this is a mistake: Sarah, a part-time Lyft driver, didn’t notify her personal auto insurer about her rideshare work. She assumed she was covered by the rideshare company’s insurance while driving for them. Unfortunately, her insurer later denied a claim when she got into an accident while driving a passenger.

According to a survey by the National Association of Insurance Commissioners, 33% of rideshare drivers do not inform their personal auto insurer about their rideshare activities.

Solution: Rideshare drivers should always disclose their activities to their personal auto insurer. Many insurers now offer rideshare endorsements that provide coverage during rideshare work.

2. Neglecting to Understand Rideshare Insurance Gaps

Rideshare drivers often overlook the gaps in insurance coverage when they are not actively transporting passengers or en route to a passenger.

Here’s why this is a mistake: David, an Uber driver, got into an accident while driving to pick up a passenger. He mistakenly believed he was fully covered by Uber’s insurance policy. However, he was left with substantial out-of-pocket expenses because he was in a coverage gap.

A study by the Insurance Information Institute found that 62% of rideshare drivers do not fully understand their insurance coverage.

Solution: Drivers should educate themselves about the phases of rideshare driving and consider additional coverage options to bridge any gaps.

ALSO READ: This is The Best Way To Finance a Car

3. Relying Solely on Rideshare Company Insurance

Many rideshare drivers assume they are fully protected by the insurance provided by Uber or Lyft.

Here’s why this is a mistake: Maria, an active Lyft driver, believed she didn’t need personal auto insurance because Lyft provided coverage during her rideshare work. However, she was shocked to learn that the company’s insurance had limits and didn’t cover certain situations, like when she used her car for personal errands.

According to a survey by The Rideshare Guy, 18% of rideshare drivers solely rely on their rideshare company’s insurance.

Solution: Rideshare drivers should consider personal auto insurance that covers both their personal and rideshare activities to avoid potential gaps in coverage.

4. Failing to Carry Enough Liability Coverage

Some rideshare drivers opt for minimum liability coverage to save money, not realizing the potential financial risks they face.

Here’s why this is a mistake: Robert, an Uber driver, had the minimum liability coverage required by his state. Unfortunately, he caused a major accident while driving for Uber, resulting in injuries to several passengers. His insurance didn’t cover the full extent of the medical expenses, leaving him with a substantial liability.

The Insurance Information Institute recommends that rideshare drivers consider carrying at least $1 million in liability coverage. However, 42% of drivers have only minimum state-required coverage.

Solution: Rideshare drivers should seriously consider increasing their liability coverage to protect themselves from potentially devastating financial consequences.

5. Not Having Uninsured/Underinsured Motorist Coverage

Many rideshare drivers overlook the importance of uninsured/underinsured motorist coverage.

Here’s why this is a mistake: Jennifer, an Uber driver, was involved in a hit-and-run accident while driving a passenger. The at-fault driver fled the scene, and Jennifer suffered injuries. Without uninsured motorist coverage, she had to cover her medical expenses herself.

The Insurance Research Council reports that 13% of motorists are uninsured in the United States, increasing the risk for rideshare drivers.

Solution: Rideshare drivers should consider adding uninsured/underinsured motorist coverage to their policies to protect themselves in hit-and-run or underinsured driver situations.

6. Neglecting Commercial Insurance for Full-Time Drivers

Full-time rideshare drivers often neglect the need for commercial auto insurance.

Here’s why this is a mistake: Mark, a full-time Uber driver, didn’t realize that his personal auto insurance policy excluded coverage for commercial use. When he got into an accident while transporting passengers, his insurer denied his claim.

According to a study by the Insurance Journal, only 30% of full-time rideshare drivers have commercial auto insurance.

Solution: Full-time drivers should consider commercial auto insurance to ensure they have adequate coverage for their rideshare activities.

ALSO READ: How To Quickly Get Cheap Car Insurance with a Poor Driving Record

7. Not Documenting Rideshare Activities

Rideshare drivers often fail to keep accurate records of their rideshare activities, making it challenging to prove their case in the event of an accident.

Here’s why this is a mistake: Michelle, an Uber driver, got into an accident while driving for the platform. However, she couldn’t provide adequate documentation of her rideshare activities, leading to complications in processing her insurance claim.

A survey by Gridwise found that 46% of rideshare drivers do not keep records of their rideshare activities.

Solution: Drivers should maintain detailed records of their rideshare activities, including trip details, mileage, and timestamps, to help support their insurance claims.

8. Ignoring Rate Increases with Personal Insurance

Some rideshare drivers fail to consider potential rate increases in their personal auto insurance when disclosing their rideshare activities.

Here’s why this is a mistake: Brian, a rideshare driver, informed his personal insurer about his rideshare work. However, he was surprised when his premiums significantly increased, leading him to consider dropping his personal coverage altogether.

A survey by Compare.com found that 38% of rideshare drivers experienced an increase in their auto insurance rates after disclosing their rideshare activities.

Solution: Before disclosing their rideshare work to their personal insurer, drivers should shop around for insurance quotes to find the best rates that suit their needs.

---

Rideshare driving can be a rewarding source of income, but it comes with unique insurance challenges. To avoid the eight biggest insurance mistakes that rideshare drivers often make, it’s crucial to:

1. Inform your personal auto insurer about your rideshare activities.
2. Understand and bridge the gaps in coverage during different phases of rideshare driving.
3. Consider personal auto insurance coverage that complements your rideshare company’s policy.
4. Carry sufficient liability coverage to protect yourself financially.
5. Include uninsured/underinsured motorist coverage in your policy.
6. Get commercial auto insurance if you’re a full-time rideshare driver.
7. Maintain accurate documentation of your rideshare activities.
8. Shop around for the best insurance rates when disclosing your rideshare work.

By addressing these insurance mistakes and implementing the provided solutions, rideshare drivers can ensure they are adequately protected, giving them peace of mind as they hit the road to drive passengers safely and securely.