Thinking About Driving for Uber or Lyft?

Your life is crazy and the one thing you never seem to have enough of is money. Working as a driver sounds like a simple solution to a big problem. You’ll drive around a little, pick up some people, and make some extra cash.

Sounds good, right? Before you jump into the Uber or Lyft life with both feet, stop for a moment. First things first, you have to make sure you’ve got the right insurance so you don’t lose everything in one fender bender.

How Insurance and Ride-hailing Work Together

Whether you drive for Uber or Lyft, the process is essentially the same. There are three stages to your working time:

  • Stage 1: Turn on the app and become available to take on passengers.
  • Stage 2: Get matched with a passenger and drive to them.
  • Stage 3: The passenger is in your car, and you’re taking them to their destination.

If you’re in an accident during Stages 2 and 3, no problem. You’re probably covered by Uber or Lyft’s insurance policy. What if you’re still in Stage 1, though? You’ll have a small amount of coverage, but not enough.

Your Auto Insurance as a Driver

You’re probably thinking the decreased coverage in Stage 1 is no big deal. You’ll just file a claim with your auto insurance. Think again. Your Massachusetts personal auto insurance policy does not cover commercial auto claims. Not only will your insurer deny your claim, they may drop your coverage for using your vehicle – and insurance – in a way that violates the terms of your insurance policy.

Your Insurance Options

If you’re going to become a driver for a company like Uber or Lyft, you’ve got two options:

  1. Commercial Auto Insurance
  2. Rideshare/Ridehailing “Gap” Insurance

In Massachusetts, commercial auto insurance will cover you in the event of an auto accident while you’re using your vehicle for work. You won’t have to worry about being dropped or paying more than your deductible out of pocket for covered claims. For part-time drivers, though, the cost can be prohibitive.

Rideshare “Gap” insurance, sometimes called “hybrid” insurance is a relatively new product, and it’s only available through a handful of insurance companies in a few states. This coverage combines personal and commercial auto insurance into one policy for a lower cost. It was designed with ridehailing and ridesharing in mind. However, if you can find a company that offers it, you’ll have to make sure your personal auto insurance policy is with them, as well.

You can drive, live the freelance life, earn extra money, or just do something different and work for companies like Uber and Lyft. But it’s in your best interest to make sure you have the right insurance first. One bad accident with the wrong kind of insurance could cost you much more than what you’ll earn as a driver.