As an independent contractor working as a rideshare or delivery driver, your personal vehicle and time are your livelihood.
You rely on your car and the flexibility of the job to generate income, so protecting your ability to work is crucial.
Standard auto insurance policies do not cover the commercial use of your vehicle, leaving you exposed.
I have worked as an insurance agent for over 15 years helping customers determine appropriate coverage for their needs.
Through my experiences, I have found many rideshare and delivery drivers are unaware of the gaps in their insurance or available options to gain proper coverage.
In this article, I provide recommendations for the types of additional insurance you should consider to safeguard your source of income and ensure you are fully protected in the event of an accident.
Gaining the right insurance coverage gives you peace of mind that you can continue working even if the unexpected occurs.
Understanding Rideshare and Delivery Insurance Requirements
As a rideshare or delivery driver, understanding your insurance requirements is critical to protecting your livelihood.
Most personal auto insurance policies do not cover commercial driving activities, leaving you vulnerable in the event of an accident while on the job.
Commercial auto insurance
Commercial auto insurance, like a business auto policy, provides coverage for vehicles used for commercial purposes, including ridesharing and delivery driving.
This type of policy will have higher limits and typically costs more than a standard personal auto policy.
However, it provides essential protection in case of an accident with injuries, especially if you are found at fault.
Some rideshare companies offer commercial coverage as an add-on to your personal policy for a fee.
This can be a more affordable option but may still leave coverage gaps.
Do your research to determine the best solution for your needs.
Personal auto insurance considerations
If opting to rely on a personal auto insurance policy, notify your insurance provider that you are using your vehicle for commercial driving activities.
Failure to disclose this information could result in denied claims or cancelation of your policy.
Some insurers prohibit the use of personal vehicles for commercial purposes altogether.
Check with your provider about their specific policies before driving for a rideshare or delivery company.
Additional coverage options
Consider adding supplemental coverage like collision, comprehensive, and uninsured/underinsured motorist coverage to help offset costs from accidents, theft, vandalism or damage from uninsured drivers.
While not legally required, this additional coverage provides more comprehensive protection for you and your vehicle.
Protecting your ability to earn an income should be a top priority.
Review all options carefully with your insurance agent to choose a solution that covers you fully without breaking the bank.
Your livelihood depends on it.
Gap Insurance – What It Is and Why It’s Crucial
As a rideshare or delivery driver, your vehicle is essential to your livelihood.
Standard auto insurance typically won’t cover you while driving for commercial purposes.
That’s why gap insurance, also known as commercial coverage or rideshare insurance, is crucial.
What is Gap Insurance?
Gap insurance provides additional coverage for the periods when you’re logged into your rideshare or delivery app but haven’t yet matched with a passenger or are waiting to pick up an order.
During these “gaps” in a standard policy, you need extra protection in case of an accident.
Gap insurance also covers you during active trips when transporting goods or passengers.
Some key things gap insurance includes:
Liability coverage: Pays for injuries or damage to others in an accident you cause.
Essential for rideshare and delivery driving.
Comprehensive and collision: Covers damage to your own vehicle.
Important given the high mileage you may log.
Medical payments: Helps pay medical bills for you or your passengers after an accident.
Can supplement health insurance.
Uninsured/underinsured motorist: Protects you if an at-fault driver lacks proper coverage.
Provides peace of mind.
Why You Need It
Without gap insurance, you’re putting your livelihood and financial security at risk.
If you cause an accident during a “gap” or on an active trip, you could face major out-of-pocket costs and lose your driving privileges.
For a relatively small monthly premium, gap insurance helps ensure you stay covered and can continue earning an income — it’s truly worth the investment for any rideshare or delivery driver.
Top Tips for Comparing Rideshare Insurance Rates
As a rideshare or delivery driver, comparing insurance rates from different companies is one of the best ways to save money on this necessary expense.
Here are my top tips for finding an affordable policy that still provides adequate coverage:
Shop Around at Multiple Companies
Don’t just go with the first insurance provider you find.
Compare quotes from at least 3-4 major companies to see how their rates stack up.
Prices can vary significantly between companies for the exact same coverage.
Consider Usage-Based Insurance
Some companies offer discounts if you opt for usage-based insurance, like Metromile or Milewise.
A device is installed in your vehicle to track your driving and the policy rate is based on how many miles you actually drive.
This can benefit those who only drive part-time for ridesharing or delivery work.
Bundle with Existing Policies
If you already have an insurance provider for your personal vehicle or home, check if they offer rideshare insurance and discounts for bundling multiple policies together.
Bundling can save you up to 25% on premiums.
Raise Your Deductibles
Opt for higher deductibles, like $1,000 or more.
The higher your deductibles, the lower your monthly premium payments will be.
Only do this if you have enough savings to afford the deductibles in the event of an accident.
Maintain a Good Driving Record
Your driving history significantly impacts your insurance rates.
Avoid traffic violations, accidents, and claims whenever possible.
A clean record means the lowest premiums.
Check your MVR annually to ensure there are no errors.
Comparing insurance options thoroughly and making choices that fit your needs and budget as a rideshare driver can help minimize the cost of coverage.
While rates and discounts vary, the time spent researching could yield hundreds of dollars in annual savings.
Protecting your ability to earn an income should be a top priority, so make sure any policy you choose provides sufficient coverage for the risks of driving professionally.
Getting the Right Coverage as a Delivery Driver
As a delivery driver, whether for food delivery or ridesharing, protecting your vehicle and livelihood with the proper insurance coverage is essential.
Standard personal auto insurance typically will not cover commercial driving activities, leaving you vulnerable in the event of an accident on the job.
Commercial auto insurance
To ensure you are fully covered during working hours, obtain commercial auto insurance.
This type of policy provides coverage for vehicles used for business purposes, including livery conveyance.
While pricier than a personal policy, commercial auto insurance protects you in situations where a personal policy will not, such as if a passenger is injured or cargo is damaged during a delivery.
Shop around at different insurance providers to find the best rates.
Rideshare insurance
For those driving for transportation network companies like Uber or Lyft, rideshare insurance – also known as TNC insurance – is specifically designed to cover the periods when you are logged into the rideshare app but have not yet accepted a fare (known as “period 1”) as well as when you have a passenger in your vehicle (known as “period 3”).
During period 1 when you are waiting for a gig and period 3 when you have an active fare, a standard commercial auto insurance policy typically will not provide coverage.
Rideshare insurance fills in these coverage gaps to fully protect you and your vehicle during all operating hours.
Additional coverage
Don’t forget additional coverage options such as comprehensive and collision, uninsured motorist, and medical payments coverage.
Comprehensive and collision cover physical damage to your vehicle.
Uninsured motorist protects you in the event an at-fault driver has no insurance.
Medical payments coverage helps pay for injuries to you and your passengers.
Also consider gap insurance, which covers the difference between what you owe on your vehicle financing and its actual cash value if it is totaled.
Obtaining the proper insurance coverage is one of the most important steps to operating a successful delivery or rideshare business.
Make sure you understand the nuances of the various policies to choose what is right for your specific needs and to safeguard your livelihood.
With the right coverage in place, you can hit the road with confidence knowing you are protected in any situation.
FAQs on Insurance for Rideshare and Delivery Drivers
As a rideshare or delivery driver, your vehicle is your livelihood.
Protecting it and yourself in the event of an accident is critical.
Here are some frequently asked questions about insurance options for drivers.
Do I need commercial insurance?
Most rideshare and delivery companies provide limited insurance coverage while you’re actively transporting passengers or delivering goods, but you’re still responsible for your own auto insurance policy.
Personal auto insurance typically won’t cover you while driving for commercial purposes.
For the best protection, consider purchasing a commercial policy or a hybrid personal/commercial policy.
How much will commercial insurance cost?
Commercial auto insurance premiums vary significantly based on factors like your driving record, vehicle make and model, coverage limits, and business type.
On average, premiums for rideshare drivers range from $5,000 to $10,000 per year.
Delivery drivers may pay $3,000 to $5,000 annually.
Shop around at different companies to compare quotes.
Do I need extra coverage beyond the state minimums?
State minimum coverage likely won’t provide adequate protection.
Liability limits of at least $100,000 per person, $300,000 per accident, and $100,000 for property damage are recommended.
Uninsured motorist coverage, comprehensive coverage and collision coverage with a low deductible are also suggested.
The more coverage you have, the less risk you take on personally.
Can I write off my insurance premiums?
Yes, commercial auto insurance premiums are tax deductible as a business expense.
Keep records of your payments in case of an audit.
The amount you can deduct depends on the percentage of total vehicle use for business versus personal driving.
What insurance do delivery-only drivers need?
If you only deliver goods and don’t transport any passengers, you have a few options.
A commercial auto policy will provide the broadest coverage.
Cargo or package insurance protects the items you’re delivering.
Bailee’s customer insurance covers damage to a customer’s property in your possession.
Check with the companies you contract for to see if they require any specific coverages.
In summary, investing in adequate insurance protection provides security and peace of mind for rideshare and delivery drivers.
Do your research to find a policy that fits your unique needs and budget.
The risks of the road are challenging enough without having to worry about insurance coverage in the event of a mishap.
Conclusion
As rideshare and delivery drivers, our livelihood depends on our ability to get out on the road and provide services to customers.
However, that also means we face more risks than the average driver given the amount of time we spend driving and the number of miles we log.
Protecting our source of income through adequate insurance coverage is essential.
While commercial insurance can be pricey, the alternative of being underinsured during an accident is far costlier.
For peace of mind and safeguarding our financial well-being, investing in the right insurance policies tailored to our needs as rideshare and delivery drivers is well worth it.
Our vehicles are our offices and our independence depends on them—so make sure to protect yourself and your business with proper coverage today.
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