Are you an Uber or Lyft driver looking for car insurance?
Or, perhaps you’re a food delivery driver working for DoorDash, Uber Eats, Postmates, or Instacart, and need car insurance?
No matter which applies to you, there’s a lot about insurance that drivers need to know.
We at Gridwise want to make sure you get information in a way that’s honest, balanced, and focused on you, the rideshare and delivery drivers who keep the world moving, well-fed, and amply equipped.
That’s why in this post, we’ll help you understand the best auto insurance options by talking through the following points:
- What is basic insurance?
- Is basic insurance enough?
- What about rideshare insurance?
- What should drivers demand from an insurance company?
- How can drivers find the right insurance company?
- How much drivers can expect to pay for insurance and 10 top companies
- Are there other add-ons that can help drivers?
What is basic insurance?
The term “basic requirements” refers to the minimum amount of insurance required by your state. The basics almost always consist of two types of liability: bodily harm and property damage. For instance, according to a June 2020 article by Michelle Megna, editorial director of carinsurance.com, this requirement is expressed in the following format: 20/40/10. The first two numbers refer to bodily injury liability limits, and the third number indicates property damage liability.
The example shown translates to $20,000 liability per person per accident, $40,000 maximum coverage per accident for bodily injury, and $10,000 for property damages.
In some states, such as Kentucky, drivers are required to carry Personal Injury Protection (PIP), which is coverage for your personal injuries and lost wages regardless of who is at fault. You may want to investigate including PIP coverage in your policy, even if your state doesn’t require it.
Depending on where you live, you may also need insurance to cover losses in case you’re involved in an accident with an uninsured motorist. Twenty-two states require this coverage, which is aptly named Uninsured Motorist (UM) coverage. It might be something worth considering, in light of an alarming fact: Even though driving without insurance is illegal in nearly every state, according to the Insurance Research Council, 1 in 8 drivers are not insured.
if you have an accident caused by an uninsured motorist, you could get stuck paying your own medical and vehicle repair bills. Being hurt is bad enough; being caught without coverage for the costs of your care could be catastrophic.
This article shows you the minimum (aka, basic) liability coverage for each state.
Is basic insurance enough?
In most cases, the state minimum will provide enough insurance to take care of your needs. To determine if this is true for you, take an honest look at your vehicle, consider how much it would cost to replace, and how much you might really need to cover your medical expenses, and those of others in the accident, should you get involved in a bad mishap.
Also, if you finance your vehicle, it’s a smart idea to purchase gap insurance, which takes care of the difference between the vehicle’s book value and the amount you owe on the loan. Suppose, for example, two years after you buy the car you’re in an accident and total it. The insurance company will write it off and reimburse you for what it’s worth. It’s entirely possible for your car to be worth $15,000, whereas you owe $20,000 on the loan. You will be responsible for paying that balance, even if you no longer have a car. That’s where gap insurance can be a godsend because it will cover that $5,000.
These are some of the concerns that relate to you as an individual driver and auto insurance policyholder. When considering your rideshare and/or delivery business, things become even more complex.
What about rideshare or delivery insurance?
When you’re a rideshare driver, you have passengers in your car much of the time. You’ll want to make sure you have coverage for your passengers that includes bodily injury. This protects you from having to dig deeply into your pockets in order to compensate them after a lawsuit. If you deliver, you have to make sure that your policy will cover losses incurred in the course of your work.
Fortunately, most rideshare and delivery platforms provide extra insurance, but it only works while you’re online with the app. If you have an accident while you are on the app, coverage provided by your rideshare or delivery company will kick in. This covers you as well as your passengers and third parties who might be involved.
Here are three scenarios to illustrate how insurance coverage typically works:
Period 1: You’re not on the app, meaning you’re driving for personal reasons. There is no coverage from your rideshare or delivery company; rather, your personal auto insurance applies.
Period 2: You’re on the app, but have not accepted a trip. You’re covered for third-party liability, but only if your personal policy doesn’t apply. You’re not covered for collision.
Period 3: You’re on the app and either riding with a passenger or in the process of executing a delivery: Your company covers you for personal injury, 3rd party liability, and collision. Note: The collision aspect may be covered only if you carry personal insurance on the vehicle that covers you while you’re not on the app.
Please note, the companies are notorious for their high deductibles. Both Uber and Lyft set theirs at $2,500, with the exception of vehicles offered through their marketplace.
You can learn a lot more about exactly what coverage companies offer in this Gridwise blog post.
Delivery companies offer coverage similar to what’s offered by rideshare platforms. Amazon Flex, DoorDash, Postmates, and Uber Eats all offer generous policies that cover you at varying levels, depending on the phase of delivery you’re in if and when you have a loss, at a maximum of $1 million in benefits. At this time, neither Grubhub nor Instacart offers an insurance policy for drivers, so you’ll want to make sure your personal policy can provide adequate coverage.
On the subject of that personal policy … if you use your vehicle for rideshare or delivery, you must inform your insurance company that you are doing so. If you neglect to notify them, and they find out you’re using your vehicle for gig driving, and you’re in an accident, your personal auto insurance may not cover you—even when you’re not on the app.
To ensure that you’re covered under all circumstances, you’ll need to purchase a rideshare and/or delivery endorsement to add to your basic auto insurance policy. Not all companies offer endorsements; many will simply refuse to cover you if you are a rideshare or delivery driver. In some cases, you may be required to carry commercial insurance, which applies to drivers in New York City and in certain other areas of the country.
Why would you need this? Remember, insurance companies, when they agree to sell you coverage, calculate risk. As a gig driver, you’re out and about far more than you would be otherwise, and you’re accruing more mileage and wear and tear than vehicles that are not being used for rideshare or delivery. For those reasons, they want you to pay for the possibility of extra loss of value on the vehicle, as well as the enhanced risk of carrying passengers and making all the extra trips that are required of delivery drivers.
Rideshare and delivery endorsements are not typically that expensive. Some cost as little as $20 per year, with an average of $94 for six months.
Two other extras you’ll want to consider are reimbursement for a rental car and towing, and road assistance. Many companies include these extras in the price, while others consider them add-ons. Even if you already belong to a separate service, it does no harm to have an extra source of roadside help to call upon in an emergency.
What should drivers demand from an insurance company?
Now that we’ve reviewed the various types of coverage, here are some factors to consider when deciding on an insurance company:
- Adequate coverage. Make sure the company can provide a policy with enough coverage to meet your needs.
- Endorsements for gig drivers. Although many companies accommodate gig drivers, not all of them do, so be sure to ask.
- Ease of communication. You want a company that will be responsive to you, whether it’s a question about your coverage or a claim you need to make. If you have an accident, you’ll need immediate attention—along with some verbal reassurance. Make sure your company offers abundant support.
- Solid financial standing. Insurance companies come and go, so don’t fall for the cheap outfit that goes belly up when you need it. Most companies are reputable; if you run into an insurer that is not mainstream, be sure to examine the company’s financial situation.
- Reasonable price. Choose a company that isn’t going to overcharge you for premiums, and offers a deductible you can manage—and remember, the biggest companies aren’t necessarily the best. Because they spend so much money on corporate overhead and large-scale ad campaigns, they often pass the cost on to their customers.
How can drivers find the right insurance company?
It’s probably obvious that you have to shop around to get the right insurance policy, but how do you do that? There are three main ways:
- Do your own research. Online services, such as The Zebra, Coverage.com, and Insurance Panda, offer instructions on how to research insurance policies on your own. They even provide price comparisons. Most of the listings offered by these companies do not cater to drivers, so you’ll have to be persistent about learning more from the individual companies.
- Call an insurance company directly. Of course, this will put you in touch with someone who is motivated to sell you on their company’s policies. But if you have your facts straight, and you’ve done some comparison shopping, this can be a good way to evaluate a company’s responsiveness and compatibility with your needs.
- Contact an insurance broker. An insurance broker is a professional who can sometimes save you money and always save you headaches. Not only can your broker assess what you need and do comparison shopping on your behalf, this type of pro can also serve as your liaison in the event you need to file a claim or change policies or providers. Brokers work on commission, so if this results in an extra cost you’ll have to decide if it’s worth it for you.
How much drivers can expect to pay for insurance and 10 top companies
The most important thing you need to know about shopping for insurance is this: The companies, policies, rates, and coverage vary by state. You also need to remember that your premiums will be calculated based on your driving record, your age, the value of your car, and other metrics that tell the company how risky it might be to insure you.
With all those factors in mind, we’ll share our ten top companies that have all of the attributes we listed above: adequate coverage, endorsements for rideshare and delivery, ease of communication, solid financial foundation, and reasonable price. They are listed in alphabetical order, along with the advantages and disadvantages of each. Click on the company name to learn about the features each one has to offer.
Remember, you’ll have to investigate which of these companies is available in your state, and how costs vary based on your location and other factors. The costs shown, where available, are average costs calculated by The Zebra.
- AAA (average 6-month premium with endorsement: $1,042). This is a very well-known and established company with a wide variety of benefits. While GPS has made many of its services obsolete, the company still has a great app, good customer service, and coverage in many states. Its rates, however, are on the high side.
- Allstate/Esurance (average 6-month premium with endorsement: $920). Allstate owns Esurance, and although the company sells endorsements in only three states, this is expanding rapidly. Allstate covers drivers with endorsements in most states. On the higher end cost-wise, but also well-established with a huge corporate infrastructure to support its operations.
- Erie (average 6-month premium with endorsement: available with quote). Erie offers coverage in just a few states, but its premiums and deductibles are reasonable. You’ll deal with an independent agent, which can be convenient when you need an advocate.
- Farmers (average 6-month premium with endorsement: $1,104). Farmers is another well-endowed insurance company. While it serves rideshare and delivery drivers with endorsements in about 30 states, its prices are rather high. Still, you’ll probably get a lot of good coverage for your dollar.
- GEICO (average 6-month premium with endorsement: available with quote). GEICO offers a hybrid policy. Rather than offering the endorsement, the company gives you a policy that covers you whether you’re on-app or not. GEICO claims it won’t cost you much more than a regular auto policy, but you’ll have to check with a rep to find out the exact amount.
- Kemper (average 6-month premium with endorsement: available with quote). This is not a widely known insurance carrier, but it’s a pretty solid one. Its biggest advantage is a willingness to insure those of us who might have problems in our financial or driving histories. A February 2021 review from Coverage.com explains more about that. Kemper offers a rideshare endorsement, but note that it does not include delivery.
- Mercury (average 6-month premium with endorsement: available with quote). Mercury is popular in areas with dense concentrations of drivers, such as California, Nevada, and Illinois. Rideshare insurance is sold as an add-on to an existing Mercury auto insurance policy.
- Nationwide (average 6-month premium: available with quote; usage-based rideshare policy). Nationwide is just beginning to roll out its rideshare and delivery insurance so it can, true to its name, eventually go nationwide. It is different from most other rideshare insurance coverage since it’s based on usage. You log into the Nationwide app while you’re driving for your gig, and it charges you based on how far and for how long you drive.
- Progressive (average 6-month premium with endorsement: $958). You’re undoubtedly familiar with this company, at least partly due to its fictional salesperson, Flo. The premium isn’t as high as some others, and the endorsement covers both rideshare and delivery.
- State Farm (average 6-month premium with endorsement: $777). State Farm falls under the category of “old reliable,” and it is available in most states. Its attitude toward handling accidents while you have passengers seems comforting. For example, if your deductible for State Farm is less than the one your TNC requires (and it usually is), you pay the lower amount.
Are there other add-ons that can help drivers?
Yes, there are. For example, your TNC may offer additional benefits. Uber, for instance, offers Optional Injury Protection for driver medical expenses, temporary total disability, continuous total disability, accidental death, survivor benefit, and accidental dismemberment. Drivers can enroll in the program and will be charged $0.15 per trip.
Gridwise Protection is another option for drivers who want coverage that’s more comprehensive than their auto policies alone provide. This plan provides protection against lost income due to hospitalization, collision repair, and unfair deactivation; 24/7 telehealth services; sick leave; and access to a rideshare legal team, all for as little as $7 per month.
Your insurance needs will vary depending upon your life situation and your personal preferences. We at Gridwise want to ensure that you’re well-informed about your options, and protected against any kind of catastrophic loss that could cause you to fall through the cracks of the system.
We hope you’ll use this post as a point of departure for your journey into a full discovery of your insurance needs, and that you get them filled as completely and inexpensively as possible.
The ultimate assistant for rideshare and delivery drivers has got you covered, too
Insurance is only one way to make sure you’re protected against all kinds of losses so you can keep working and earning a living.
And speaking of earning, you also have Gridwise watching out for you. Track your earnings automatically by linking your gig apps to Gridwise. Every trip, tip, mile, and minute will be tracked from the moment you go online at the beginning of each shift.
When you want to see how much you’re earning by the hour and mile, as well as which app is making you the most money (and when), the Gridwise app creates gorgeous and informative graphs like these.