ClickCease If I Drive for Uber or Lyft, Does My Insurance Go Up?

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Rideshare Insurance Coverage

In 2019, 0.3 percent of American adults said that they were taxi drivers. A significant portion of that growth occurred in 2014. During 2014, Uber expanded from 66 cities in the U.S. to 266 other cities around the world. In New York City, there are more than 80,000 people who drive for Uber, Lyft, Gett, and Via. In California, Lyft has more than 325,000 drivers while Uber has at least 200,000 drivers in the state.In the state of California, the law states that drivers for transportation network companies (TNCs) like Uber and Lyft must be covered by car insurance. When the rideshare app is off, the driver’s personal auto insurance is in play. When the rideshare app is on, the driver is on the clock for Uber or Lyft, during this time, these companies provide insurance coverage for their drivers. 

Last year, Assembly Bill 5 was passed because of the way rideshare and gig companies used independent contractors to do the work of employees. According to the bill, businesses like Uber and Lyft are supposed to hire workers to be their employees and not independent contractors. Uber and Lyft lobbied aggressively to be exempt from the law, but they are still required to follow it. Because of the law, gig workers now have a right to labor protection and benefits like paid parental leave, unemployment insurance and overtime pay.

The Way Insurance Companies Handle Ridesharing

When it comes to ridesharing insurance, insurance companies divide the driver's time into four different periods. If the app is closed, the driver is not technically in rideshare driver mode. The following are the different classifications of driving periods.

  • Period 0: The ridesharing app is closed.
  • Period 1: The driver's app is open, but they have not been matched with a driver yet. Instead, they are driving around and waiting for a passenger.
  • Period 2: The driver is finally matched up with a passenger, and they are in the process of driving to the passenger to pick them up.
  • Period 3: The rider is finally in the car and has started their ride. This period finishes once the rider gets out of the vehicle.

Period 0 covers anytime when the rideshare app is closed, and is covered by a driver’s personal insurance, which must meet the minimum automobile insurance requirements in California. This means that you must have at least $15,000 in bodily injury coverage for each person who is injured in an accident. You must have $30,000 of bodily injury coverage per accident and $5,000 for property damage coverage as well.

Period 1 is when you are waiting for the app to pair you with a passenger. In this stage, you must have $50,000 of bodily injury liability coverage per person and $100,000 of bodily injury liability coverage for the entire accident. You must also have $30,000 of property damage liability.

Period 2 and 3 have similar requirements. Once you are paired with a passenger, the rideshare company is responsible for buying a liability insurance policy worth $1 million. California requires rideshare companies to buy this coverage for you and your passengers.

In California, Lyft provides collision and comprehensive coverage. For Lyft's coverage to work for you, you must have collision coverage through your normal policy. In addition, Lyft will charge you a $2,500 deductible before the company's insurance kicks in.

Uber also covers its drivers in California. With Uber, drivers are covered by $1 million of underinsured and uninsured motorist bodily injury coverage. In addition, you can get comprehensive and collision coverage after you pay the $1,000 deductible. You also need to have collision coverage on your normal insurance policy to receive comprehensive and collision coverage through Uber.

Will My Insurance Go Up If I Drive with Uber or Lyft?

If you become a driver with Uber or Lyft, your insurance will go up. You need to tell your insurance provider that you are driving for a rideshare company. If you do not inform your insurance provider, they may not cover your damages or other costs when you get into an accident.

Once you tell your insurance provider that you are working for a rideshare app, they will most likely increase your premium. When people drive for rideshare programs, they drive more often and for more miles than normal drivers do. Because of this, Uber and Lyft drivers are more likely to get into accidents. Car accidents cost insurance companies money, so they pass this cost onto drivers through higher premiums.

Other than your insurance costs going up, driving for a rideshare company may mean that you have to switch insurance providers completely. The insurance industry has been fairly slow about adjusting to the needs of rideshare drivers. Instead of creating options for Uber and Lyft drivers, some insurance companies refuse to offer coverage for Uber and Lyft drivers. A number of insurance carriers will not let you be insured with them if you are also using your car for ridesharing purposes.

Even though your insurance carrier may not actually allow ridesharing coverage, you need to inform them about your ride sharing work anyway. Once you tell your insurance company that you drive for Uber or Lyft, they will most likely change your premium and coverage. Your premium will most likely increase to help cover your added risks.

When you update your insurance plan, you should carefully read through the policy. There may be a gap in coverage when it comes to your car's physical damage in an accident. Any coverage gaps could leave you paying for a bunch of out-of-pocket expenses if an accident occurs. While a coverage gap may be acceptable to you, you need to know whether it exists or not so that you can make an informed decision.

Contact West Coast Trial Lawyers Today

If you have sustained injuries in the city of Los Angeles as a result of a rideshare accident, our experienced team of Uber and Lyft accident attorneys at West Coast Trial Lawyers can help you recover financial compensation for the losses you have suffered, including medical bills, property damage, lost wages, and pain and suffering. Call us today at 888 341 9802 or email [email protected] to schedule a free consultation with our experienced, caring, and compassionate legal team.


If you have been injured in an accident, you can count on the legal team at West Coast Trial Lawyers to fight for your rights every step of the way. Contact us today to schedule your free case evaluation with a personal injury attorney.
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