Driving for a rideshare like Uber or Lyft can be a smart way to supplement your income. It’s so convenient, in fact, that drivers tend to overlook some important basics, like rideshare insurance.

Doesn’t My Insurance Cover My Car?

If you’re driving in most states, the financial responsibility laws require you to carry a certain minimum coverage. If you’ve already met these minimums, doesn’t that cover anyone in your car, such as a rideshare passenger?

The answer is no. Most insurance policies specifically do not cover you or your vehicle if you’re using your car for anything other than personal use or to drive around people you know. If you’re using your car for a commercial operation, you won’t be covered. Consequently, your personal insurance rates could skyrocket if you have an accident on the job and your insurance provider finds out.

Doesn’t the Rideshare Company Cover Insurance Costs?

This question is complicated. Uber, for example, does offer commercial liability to their drivers. The first problem is there are some gaps in that coverage which can leave you vulnerable. Worse, rideshare company insurance doesn’t change the fact that you’re still obligated by many state’s law to personally carry enough insurance coverage to meet the minimums.

Your own personal insurance doesn’t cover rideshare, yet you’re still obligated to carry personal insurance any time you’re on the road. Regardless of which insurance the rideshare company might have available; most drivers will need additional coverage.

Why You Need Insurance

It’s the Law

Many states’ laws uses your rideshare app to determine how much liability insurance you are required to carry. Whenever your app is on, the law puts you into one of three categories:

  • Category one covers the time you’re actively waiting for a passenger to book
  • Category two covers the time a passenger has booked, but has not been picked up
  • Category three covers the entire time the passenger is in your car

Each of these categories require a different level of insurance coverage. Whenever your app is off, you don’t need any coverage other than your personal insurance.

Rideshare Insurance Isn’t Enough

Even if it were legal for you to use only the insurance from your rideshare company, it’s simply not enough. There’s no comprehensive coverage for you during category one: the time you spend actively online looking for a passenger. Yet, state law requires you to have insurance during this period. Rideshare insurance fills in this gap and ensures you’re covered every moment that your rideshare app is open.

The Financial Consequences Are Extreme

If you’re involved in an auto accident and don’t have the proper insurance, it could easily spell financial and personal ruin. Car accidents cost Americans over $230.5 billion a year. It’s not just damage to vehicles you have to worry about: the biggest costs in an accident can be loss of income, enormous medical bills, or a lifetime of disability for you or someone you injure.

Another important consideration are the penalties for driving without the proper insurance. All the penalties and fees for a first-time offense can easily add up to nearly $500, and your car may be impounded. You won’t be able to get it back until you do get insurance; and if you’ve just had an accident, it will be all the harder to find affordable rideshare insurance.

How Much Will Rideshare Insurance Cost?

The good news is rideshare coverage isn’t terribly expensive. In some cases, your own private insurer may be willing to offer you rideshare coverage for an extra $40 or $50 a month. In other cases, you may need to get a quote from another insurer.

The price you pay will depend on your driving record, credit score, and how much time you spend driving. If you’re buying rideshare insurance in most states, separate from your personal insurance, expect to pay between $120 and $250 a month.


You may not have thought much about rideshare insurance, but if you’re using your car for commercial purposes, rideshare coverage is crucial. The extra costs will be well worth it for the peace of mind; and for the protection when the day comes you need it.

Therefore, we strongly recommend you speak to your insurance agent about the benefits of ride share coverage.

Any information contained herein is intended solely for informational purposes and does not constitute legal advice.

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