4 Rideshare Insurance Mistakes Hitting Uber & Lyft Drivers in Their Wallets

by | Auto Insurance

How These 4 Rideshare Insurance Mistakes Are Hitting Uber and Lyft Drivers in Their Wallets
It was an idea that quickly caught fire in 2009. Allow anybody to use his or her own car as a taxi. Then riders can “hail that taxi” using their smartphone. Genius!

Suddenly rideshare was born. Uber became an overnight sensation. Then Lyft soon followed.

Good riddance taxis. Hello opportunity, extra money, faster pick-ups (and no more sticky seats and weird smells).

Is there a better side business (side hustle) out there? Heck, all you need is a driver’s license, a car and a little free time. Right?



Rideshare drivers across the nation are forgetting about one important piece to this great opportunity. Rideshare insurance.

That’s right. In a recent poll of 1,000 rideshare drivers, a full 77% did not have adequate insurance. Perhaps even you.

In other words, with every pickup, you’re putting your money at SERIOUS risk.

Let’s take a closer look at these 4 insurance mistakes. With each one, ask yourself if you are putting yourself at risk.

Rideshare Insurance Mistake #1: LYING to Your Insurance Provider

Did you know that you’re supposed to let your auto insurance provider know whenever there’s a significant change involving your vehicles or your driving habits.

Like when you get a new car. Or if you have an accident. Or if your teenager turns 16 and is ready to terrorize the city on wheels.

Turning your car into a job also qualifies.

Think about it: You’re exponentially increasing the number of miles you drive. Which means you’re significantly increasing your risk for an accident.

Not to mention, you’re carrying precious cargo — Other people!

So, by failing to mention to your insurance carrier that you drive for Lyft or Uber, you are essentially lying.

It’s akin to not disclosing your history of heart problems to your health insurance provider.

“But everybody ‘forgets’ to tell their auto insurance provider, right?”

Yes, many do. Which may be a short-term win. Unfortunately, if you have an accident (and remember, your odds of an accident while being a rideshare driver just shot up) three things may happen.

First, you may have to pay a major chunk of that bill. That’s money for the repairs, money for injuries and any traffic citations, of course.

Second, your rates may climb significantly.

Third, your insurance carrier is likely to DROP you.

(Just like your significant other might drop you if you lied to him or her)

So, let’s be honest from the start.

Talk with your auto insurance provider about options for rideshare coverage.

Or you’re welcome to speak with us. Takes just minutes. And our rideshare coverage plans are surprisingly affordable.

On to mistake #2…

Rideshare Insurance Mistake #2: Assuming Uber or Lyft Has Your Back

You might be thinking…

“But my rideshare company ensured me I was covered through THEM. What gives?”

Yes you ARE covered. Somewhat.

But, you’re still exposing yourself to significant risk. (And by risk, I mean money, debt… you get the ugly picture).

It’s a little complicated. But we’re here to simplify it.

There are 3 different periods of rideshare insurance. Think of periods as “phases” as a rideshare driver.

Period 1 — Online and WITHOUT a ride request. You’re just cruising around with nobody in the car and no pickup requests.
Period 2 — Online and WITH a ride request. You could be en route to a rider or even parked and waiting for a rider.
Period 3 — Online with a RIDER in your car. Woo-hoo, You’re making money!
Here’s the problem. Uber and Lyft’s rideshare insurance only covers drivers during Periods 2 and 3…

But they leave you high and dry throughout Period 1!

If you get into any type of accident during Period 1, you may end up paying through the teeth. Seriously.

You won’t have any collision coverage from your rideshare company. Plus, your personal insurer likely won’t cover you either. (Especially if you “lied” to them and didn’t tell them you were a rideshare driver).

And it can add up fast! Repairs. Injuries. Even lawsuits.

Suddenly your side hustle is looking more like a side nuisance.

Don’t worry. While Uber or Lyft might not have your back, we will. Ask us about adding a simple policy to help protect you throughout Period 1… and anytime you’re working your side gig.

Now let’s tackle mistake #3…


Rideshare Insurance Mistake #3: Accepting “NO” From Your Auto Insurance Provider

So, you’re ready to come clean and march down to your insurance company and tell them you are a rideshare driver.

But, to your shock, they tell you one of two things:

One, they say, “Sorry, we don’t offer rideshare insurance policies.”

Or two, “Sure thing. You’ll need to buy one of our commercial auto policy to be properly insured.”

Are you kidding! You just laid your soul on their desk and told the truth because you wanted to protect your wallet. You did what’s right… and they feed you these lines?

Fact is, there are still MANY auto insurance providers that are behind the times.

(Remember, Uber started in 2009) But some insurance companies don’t want to deal with the increased risk.

At Signature Insurance, we see it differently. Because it’s your job, you’re more likely to drive safely and responsibly.

That’s why we proudly carry rideshare insurance policy options. Plus, you’ll find our policies to be very competitive. Very affordable.

Also, don’t fall for it if your current auto insurance provider requires you to purchase a commercial policy. That should send shivers down your spine.

Commercial policies are very costly. So much so that the premiums may eat into your rideshare revenue.

We don’t play those games. We use common sense.

Just because you have a rideshare business doesn’t mean you belong in a high-premium commercial policy.

Therefore, we will go out of our way to find you the policy that provides the coverage you need at a reasonable rate.

Now for our final often-made rideshare mistake…


Rideshare Insurance Mistake #4: Treating Your Business Like a Hobby

You may have a full time job. You may have another part-time job.

But make no mistake, as a rideshare driver, you are a BUSINESS. You’re not simply a driver delivering pizzas for Pizza Hut or Papa John’s.

You’re running your own part-time business.

And any business — including rideshare drivers — should be set up as an LLC.

Why? It’s an added layer of protection.

Protection against lawsuits. Protection against insurance claims. Protection for your personal income.

By becoming an LLC, it’s also a big help at tax time. It helps keep your business expenses and personal income separate.

It’s pretty quick and easy to set up an LLC for your rideshare business. The minute you do, you may see advantages in your auto insurance coverage.

Conclusion: Protect Your Business. Protect Your Bank Account.

Insurance companies are designed to manage risk.

If you’re self-employed and work from home, there’s much less risk of an accident.

If you’re commuting daily for an hour or two in aggressive, bumper-to-bumper traffic, you assume a greater risk.

As a rideshare driver, you must understand that you fall into a high-risk category. The odds of getting into an accident, having bodily injuries and getting sued is probably 5 – 10X higher than your average driver.

Most rideshare drivers would rather ignore insurance matters and focus on getting more riders and getting more money.

Everyone likes to ignore insurance… until they need it.

Because the second that driver nails you at an intersection, it’s one of the first things that crosses your mind.

Hey, we’re here to help. We’ve helped many rideshare drivers protect their families, their business and their assets by providing better coverage.

Now they’re able to focus on earning more and worrying less.

Uber’s motto is “Evolving the way the world moves.”

We just want to help you and all of your riders to move without unnecessary risks.

Just as you can help us out by driving us to a concert, dinner or the airport…

Let us help you out by giving you the peace of mind and confidence that you’re 100% covered every time you get behind that wheel.

If you or someone you know drives for Uber or Lyft, you’re welcome to call us for a free review of your policy. We’ll be honest and let you know if you’re good-to-go or if you need a bit more coverage for your rideshare business.

Get insurance today!

At Signature Insurance we want to help you understand your insurance coverage options so you make the best decision.

Contact us at (586) 274-9600 and we’ll be happy to get quote for you from many of the top auto insurance companies or home insurance companies in Metro Detroit.