Yes, they do. Whether you work for a rideshare company on the side or as your main job, you may have wondered if there is commercial auto insurance for rideshare drivers, and if so, do you need it?
This article will go through the basics of commercial car insurance for rideshare drivers, including what commercial auto insurance is, how rideshare companies insure their drivers, and whether commercial insurance is a good idea for rideshare drivers.
What Is Ridesharing?
Ridesharing is a business model where passengers can directly request rides from drivers working for a particular rideshare company, also known as a transportation network company (TNC). Usually, passengers and drivers communicate through an app where both passengers and drivers can manage payments, rate each other, and track each other’s locations. Two of the most well-known rideshare companies in North America are Uber and Lyft.
Unlike traditional taxi and livery services, rideshare drivers don’t need a special license and own their own vehicles. And while Georgia rideshare drivers do need to meet certain vehicle requirements and pass a criminal background check, they don’t need the intense certifications of taxi and limousine drivers.
Does My Personal Auto Insurance Policy Cover Ridesharing in Georgia?
No. Your personal insurance policy only covers personal use of your car. Here, “personal use” means that your car isn’t being used for hire or for business. Examples of non-personal use include:
- Transporting people for a fee (such as through Uber and Lyft)
- Transporting goods for a fee (including Uber Eats, DoorDash, and similar services)
- Hauling significant tools and equipment to conduct your work (including TaskRabbit, Thumbtack, and similar services)
If you use your own car for any of these activities, then you’ll need commercial insurance to ensure that you’re properly protected.
Do Rideshare Companies Insure Their Drivers?
Uber, Lyft, and other reputable rideshare companies provide some insurance coverage while you’re logged into the app and accepting passengers. Here is how Uber and Lyft structure their insurance coverage in Georgia:
- Offline or the driver app is off
- No coverage
- Available or waiting for a ride request
- $50,000 in bodily injury liability (per person)
- $100,000 in bodily injury liability (per accident)
- $25,000 in property damage liability
- During trips and on your way to pick up passengers
- $1,000,000 in third-party liability
- Uninsured/underinsured motorist coverage and/or first-party injury coverage (PIP/MedPay)
- Collision and comprehensive coverage up to the value of your car ($2,500 deductible)
Keep in mind that rideshare companies and your auto insurance company may have different views of what it means to be “on duty” as a rideshare driver. For example, if you’re driving from your home to the airport to start picking up passengers, your trip to the airport won’t be insured by the rideshare company until you sign into the app. At the same time, your auto insurance may not cover you while you’re on your way to the job. This leaves you and your car in a legal gray area if you’re involved in an accident on your way to the airport. This is where commercial insurance for rideshare drivers can help.
Why Do Rideshare Drivers Need Commercial Vehicle Insurance?
While rideshare companies offer insurance for on-duty drivers, coverage is limited to certain amounts and certain situations. Consider these scenarios:
- You’re driving to a particular part of town where you know you can get good business. Since you don’t want to start accepting rides until you get there, you stay signed out of your rideshare app during the trip.
- You’re in the middle of a ride when you drive into an area with no cellular signal, or your phone runs out of battery. From the rideshare company’s perspective, you’re not signed into the app and therefore aren’t covered by the company’s insurance.
- While on duty, you’re at fault for an accident that exceeds what your rideshare company covers.
In all three cases, you’re in an insurance gray zone. On the one hand, you’re involved in business activities that your personal auto insurance company won’t cover. On the other hand, the rideshare company’s insurance won’t protect you either. If you’re involved in an accident, you can suddenly find yourself on the hook for hundreds or even thousands of dollars. And if either insurance policy does not cover you, you can even be charged for driving without insurance in Georgia, which means steep fines and a suspended license for up to six months. You may even be required to file an SR-22 certificate of financial responsibility before getting your license back.
Does Commercial Car Insurance in Georgia for Rideshare Drivers Have Better Coverage?
A big advantage of commercial insurance for rideshare drivers is that it can provide better coverage for your car, especially when it comes to collision and comprehensive coverage.
While Uber’s and Lyft’s insurance includes collision and comprehensive coverage, it’s quite limited, even when you’re actively transporting passengers. First, the deductible for this coverage is $2,500. Remember that an insurance deductible is an amount you need to pay towards repairing your car before the insurance company starts contributing. So, if you’re involved in an accident that causes $3,000 in damages to your car, the insurance company used by Uber and Lyft will only reimburse you for $500 — you would need to pay the remaining $2,500 yourself.
With your own commercial insurance for rideshare drivers, you’re free to change your deductible based on your needs and financial situation.
Another disadvantage of rideshare company insurance is that it doesn’t include rental car reimbursement. This means that if your car needs to be repaired for a few days, you’ll need to pay for your own alternative transportation. Not only is this a hardship if you don’t live near public transportation, but it’s also a major income hit for rideshare drivers.
On the other hand, commercial insurance for rideshare drivers can provide much more meaningful coverage, including rental car reimbursement and towing services.