The rapid growth of ridesharing services like Uber, Lyft, and Bolt has changed how people commute and how drivers earn an income. However, this new way of driving comes with important insurance considerations. Liability coverage, in particular, plays a crucial role in protecting both drivers and passengers. Understanding how it works can help rideshare drivers make informed decisions about their coverage needs.
What Is Liability Coverage?
Liability coverage is the type of auto insurance that pays for damages or injuries you cause to others in an accident. It generally includes:
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Bodily Injury Liability – covers medical expenses, lost income, and legal fees if someone is hurt.
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Property Damage Liability – pays for repairing or replacing someone else’s car or property.
Without liability insurance, rideshare drivers could be personally responsible for significant costs in the event of an accident.
The Three Phases of Rideshare Coverage
Rideshare insurance typically operates in phases, depending on the driver’s status in the app:
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App Off (Personal Use Only)
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Your personal auto policy applies.
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The rideshare company’s insurance does not provide any coverage.
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App On, Waiting for a Ride Request
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Limited liability coverage is provided by the rideshare company.
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Coverage often includes:
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$50,000 per person for bodily injury
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$100,000 per accident for bodily injury
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$25,000 for property damage
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Your personal auto insurance usually excludes coverage during this time unless you have a rideshare endorsement.
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Ride Accepted (Pickup to Drop-Off)
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The rideshare company provides primary liability coverage, often up to $1 million.
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This coverage applies from the moment you accept a ride request until the passenger is dropped off.
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Gaps in Coverage
While rideshare companies provide substantial liability protection, gaps still exist, especially during Phase 2 (waiting for a ride request). If you get into an accident during this period, coverage may not be sufficient, and your personal insurance might not help unless you purchased additional coverage.
How Drivers Can Protect Themselves
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Rideshare Endorsements: Many insurance companies offer special add-ons to personal policies that close the gap between personal and rideshare insurance.
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Commercial Auto Policies: For full-time drivers, a commercial policy can provide broader protection, though it is more costly.
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Policy Review: Always read your rideshare company’s insurance details to understand limits, deductibles, and exclusions.
Why This Matters
Driving for a rideshare company is different from personal driving. Without the right liability coverage, you could face medical bills, lawsuits, or repair costs that exceed your coverage limits. Taking the time to understand your insurance needs ensures you can work safely and confidently.
Final Thoughts
Liability coverage is the foundation of financial protection for rideshare drivers. While rideshare companies provide some protection, it may not always be enough. The smartest approach is to review your personal auto insurance, consider rideshare endorsements, and ensure you’re covered in all phases of driving. By doing so, you can protect both your passengers and your financial future.