Too many drivers don’t find out until it’s too late that the auto insurance coverage they purchased for their vehicle doesn’t always cover damages that occur when delivery or rideshare driving. As a gig driver, you need to be aware not only of what the companies you drive for require of you, but what your average auto insurance policy will or won’t do for you in the event of an accident.
In this post, we explain the role insurance plays in your driving gig, and offer options that ensure you get all the protection you need. Here’s how we’ve lined things up:
- Why do drivers need rideshare and food delivery insurance?
- Don’t rideshare and delivery companies offer insurance?
- What exactly is rideshare insurance?
- How much is rideshare insurance?
- Where can drivers get affordable insurance?
Why do drivers need rideshare and food delivery insurance?
When you sign up with an app to drive or deliver, all you have to do is show that you carry an insurance policy on your vehicle. Theoretically, you’re good to go. But are you, really?
Start by asking, “Does being a rideshare driver affect my insurance?” In short, yes. When you put your car to work so that you can do a rideshare or delivery driving gig, the companies that insure you begin to look at the risk they’re taking in a different way. Now you’re not just driving to and from work, and here and there for social reasons. You’re going to be driving a lot, and no matter how careful you are, the extra driving time raises the probability that you will be in an accident.
Read your insurance policy carefully! If you have an average auto policy, it’s likely that there are limits to how much it will cover if you have an accident while you’re driving for rideshare or delivery. In some cases, your policy can be canceled if you have not revealed that you are using the vehicle to make money.
Don’t rideshare and delivery companies offer insurance?
It’s true that rideshare and/or delivery companies provide coverage for drivers, as well as any passengers that might be involved if you’re in an accident while you’re on the app. There are certain conditions, though, that you should know about.
Below we outline the three tiers of coverage offered by most apps, a framework borrowed from the Uber website. You need to check the insurance stipulations of all the apps you drive for to see exactly what coverage you will have in the event of an accident.
- When you go offline, or your driver app is off, you must rely on your individual insurance policy.
- When you go online and are available for rides or orders, the coverage is as follows:
- third-party liability if your personal auto insurance doesn’t apply
- $25,000 in property damage per accident
- $50,000 in bodily injury per person
- $100,000 in bodily injury per accident
- The following coverage applies when you are en route to pick up/drop off deliveries or executing a rideshare trip:
- $1,000,000 third-party liability
- contingent comprehensive and collision (excluding accidents occurring in New York State) up to the actual cash value of the vehicle, with a $2,500 deductible
While the coverage from Uber might be adequate in most cases, you should take note of the very high deductible ($2,500) involved. This can put you in a precarious financial position should you be unfortunate enough to experience an accident. It’s certainly something to consider when you weigh the pros and cons of investing in your own insurance coverage.
What are the advantages of rideshare insurance? There are more than a few, and once you learn about them, you’ll see why rideshare insurance is so important.
What is rideshare insurance?
Rideshare or food delivery car insurance is coverage over and above what your personal auto policy provides. It is known in the insurance business as an endorsement. It ensures that you will be covered in the event of an accident, even though you are using your car to make money. This article from Forbes.com gives a thorough overview of what rideshare insurance is, why you need it, and where you can find it.
Not every insurance company offers rideshare or delivery endorsements. You will have to check with your insurance company and shop around with others, so you can get an endorsement without paying unaffordable premiums.
For some gigs, especially Amazon Flex, commercial insurance is required. Most US drivers are covered by the commercial policy Amazon Flex holds. Drivers in the State of New York, however, must purchase their own commercial insurance; state law does not allow them to be covered by Amazon’s policy. Drivers overseas must also procure their own hire and reward insurance, which is the same or similar to a commercial policy.
Don’t get complacent, though, believing that working for Flex covers all your bases. You also need to have your personal auto policy, and you must tell your insurance company that you will be using your vehicle to deliver for Amazon Flex. If you don’t, just like with other driving gigs, you can wind up being charged with insurance fraud. Honesty really is the best policy, particularly when you’re working with insurance companies.
How much is rideshare insurance?
There is no straight answer to this question. Costs vary based on the state in which you live, and the particular insurance company that offers endorsements for rideshare and delivery drivers. In general, according to Nerdwallet, Mercury offers the endorsement for an extra $27 per month, and Safeco’s cost is “likely” under $10 per month. State Farm, Nerdwallet reports, charges as much as 10–20% of the premium above the basic rate.
If you can get an inexpensive policy, that is certainly to your advantage. However, it isn’t always possible to find a low cost auto policy whose underwriter is willing to add a rideshare endorsement. Often, drivers find that they have to take a more expensive policy, and then add on the cost of the endorsement.
Despite the possible expense, getting insurance for food delivery or rideshare is a wise investment. Relying on your rideshare or delivery company for extra coverage could mean you pay a deductible that exceeds what you would have paid for that extra insurance over the course of the entire year.
Accidents happen more frequently to rideshare and delivery drivers—the most obvious reason being that because they drive more, the probability of being involved in a traffic mishap is higher than for less mileage-intensive drivers. This article from Market Business News points out that delivery drivers who are under pressure to make the maximum number of trips within small time frames are particularly at risk. They are more likely to run red lights and ignore traffic signs, in hope of shortening their delivery times. Rideshare drivers, as well, may want to race from one ride to the next to maximize their earnings.
New business practices that companies have rolled out over the past year have put some delivery drivers under increased pressure. DoorDash, Gopuff, Gorilla, Joker, and other delivery services are competing for a market that demands delivery in 15 minutes or less. Read this Gridwise post to learn more about how this impacts driver safety, and the need for proper insurance coverage.
Where can drivers get affordable insurance?
When it comes to procuring auto insurance plus delivery or rideshare insurance, there’s a tremendous amount to consider. It’s important to put yourself in a position where you’re fully protected. This Gridwise post provides details about auto policies and what you need to ensure that you’re covered thoroughly.
Gridwise offers drivers the opportunity to find comprehensive and affordable auto insurance through the Gridwise Auto Insurance Marketplace, part of Gridwise Benefits.
While it’s possible to find fair deals on auto insurance with rideshare and delivery endorsements, it can still be quite costly. So now what do you do about the other kinds of insurance you might need? What if you can’t work for a while because your car is in the shop? Or what if you become disabled? Worse yet, what will your family do if you are separated from them by accidental death?
Gridwise has your back. We realize that you have to lay out a great deal of money for your gig driving business, and that as an independent contractor, you don’t receive company benefits that would cover concerns such as those just mentioned. Gridwise Benefits offers a full menu of insurance options along with medical, dental, and vision care. You can pick and choose the coverage you want, and pay very low prices for them. Gridwise has formed its own group, comprised of drivers like you, to receive maximum savings on insurance, including
- life insurance
- accidental death and disability insurance (AD&D)
- identity theft protection
- dental insurance
- vision care insurance
- accident medical expense insurance
- critical illness insurance
- discounts on alternative medical treatments, chiropractic visits, and teletherapy
- a risk advisor that constantly monitors your home and personal safety
Gridwise designs programs and services specifically for gig drivers like you.