Uber and Lyft Insurance

When it comes to ride-sharing companies, there are usually only two names that come to mind - Uber and Lyft. These two heavyweights of the transportation-service industry have been locking horns for quite some time now, and the rivalry shows no signs of easing up any time soon. In fact, in 2019, both of these companies filed for their initial public offering on the same day!

Taking a look at the US ride-sharing market, Uber is the bigger player, with around 65% of the market to Lyft’s 35%. Uber has around 3.9 million drivers, while Lyft has 1.4 million. It’s said that the success of a ride-sharing company largely boils down to how successfully they can attract new drivers to their side. The more drivers they have, the more cities they can cover, and the more passengers they can help to hitch a ride.

Although they are very similar, there are some subtle differences in their services for both passengers and drivers. In this article, we will look at some of these differences and what you need to know about insurance if you want to drive for them. Let’s jump into it.

Auto Insurance for Rideshare Drivers

Auto insurance for rideshare drivers is somewhat of a problematic and contentious topic. There has been a messy relationship between insurance companies and rideshare companies such as Uber and Lyft, which has left some unsettling gray areas with driver insurance coverage.

In short, the Uber and Lyft insurance that their drivers have coverage under only apples during certain parts of their working tasks. To explain, let’s break it down into the four ride-sharing periods that are defined by insurance companies:

Period 0 - The time when the app is closed, and the driver is offline from the ride-sharing companies server.

Period 1 - The time waiting for a passenger.

Period 2 - This is the period between accepting a new pickup request and driving to the passenger.

Period 3 - The time when the passenger is in the car being transported to their destination.

In general, period 0 is covered by the driver’s auto insurance policy, as this is not considered commercial usage. Any accidents that occur during this time will be dealt with separately to Lyft or Uber insurance.

Period 1 is where the issues lie for rideshare drivers. At this point, they are signed in and waiting for a job, but they are not covered by their personal auto insurance, or by their rideshare company’s commercial insurance either. This is a gray area that leaves drivers extremely exposed to incurring heavy financial losses.

Lastly, periods 2 and 3 are fully insured by Uber or Lyft with their comprehensive commercial insurance.

What Insurance Does an Uber or Lyft Driver Need?

rideshareRideshare drivers need to do something to fill this gap; otherwise, they could be in for a sizable bill should an accident ever happen. Fortunately, there is a solution.

The best way to bridge this gap in coverage is with rideshare insurance specifically designed with this issue in mind. It’s typically available as an optional add-on to most personal auto insurance policies for as little as $10-$20 per month. This ‘rideshare endorsement’ gives drivers peace of mind that they are covered while waiting for a passenger (period 1).

Drivers have the option to opt for full commercial coverage, but this will be much more expensive, and the coverage level is often unnecessary for a rideshare driver.

Which is safer: LYFT or Uber?

Both platforms use the same background checks when it comes to hiring drivers, so there really isn’t too much to separate the two. As far as privacy goes, Uber is slightly better than Lyft as it doesn’t disclose your GPS location to the diver when they accept your ride request. All they see is the location that you requested the pick up-from.

Lyft displays your pick up address and your GPS location. However, this isn’t a huge deal, and it usually helps to make the pickup easier for the driver. If you are still concerned, you can deny Lyft access to your phone’s GPS in the settings.

Why is LYFT so much cheaper than Uber?

Lyft being cheaper than Uber is a common misconception that is most likely attributed to the smaller presence that Lyft has compared to its rival. The prices for their services vary from state to state, but more often than not, both of these apps come off charging at around about the same price point.

The cheapest rideshare option for Uber (Uber X) is generally a little less expensive than the Lyft Economy service. According to the rates that are published by Uber and Lyft, Uber seems to charge a lower initial fee than Lyft; however, Lyft’s per-mile and per-minute rates are lower than those of Uber. In short, Lyft is cheaper for longer rides, while Uber is the better option for short trips.