Ridesharing services like Uber and Lyft have become a popular option for people to supplement their income, or as full-time self-employment. However, rideshare driving opens up a grey area when it comes to car insurance. In fact, it isn’t grey at all, but it may appear so if you aren’t familiar with the details.
Most rideshare companies, including Uber and Lyft claim to provide adequate insurance coverage to protect you if you get into an accident when passengers are in the car, but they also have a requirement that you must have personal car insurance in order to qualify as a driver. And that is the source of the confusion—do you need additional insurance to be a rideshare driver or not? Unequivocally, the answer is yes.
Mixing Business with Pleasure
The idea behind ridesharing is that since people don’t use their personal vehicles one hundred percent of the time, that they can use it to drive paying passengers when they don’t need it for anything else. However, when you use your personal vehicle for non-personal reasons, you may invalidate your auto insurance policy. Insurance companies don’t allow you to mix commercial and personal driving, because, among other reasons, it complicates the assessment of risk on which the cost of your premiums are based. If you fail to tell your insurance company that you are rideshare driving, and you get into an accident, you could be denied any coverage at all.
Commercial Car Insurance Costs
So if your personal insurance won’t cut it, will you need commercial insurance to be a rideshare driver? Commercial auto insurance generally costs a lot more than personal insurance so it isn’t a good option for rideshare drivers. Especially for those who only drive part-time commercial insurance doesn’t make sense.
Luckily, to fill the need as the instance of rideshare driving increases, many insurance companies have started offering rideshare insurance as an add-on to personal auto insurance policies. So for a reasonable increase to your car insurance premiums, you can be adequately covered for the personal use of your car as well as the time that you are using it to drive others.
Get Rideshare Insurance Advice from Experts
It’s the law in Michigan that drivers have car insurance to cover injury and damage in case of an accident. There are changes coming in July 2020 to the state’s no-fault insurance rules that give drivers more options on the amount of insurance converge they choose to pay for. E&Y Agency can help you determine which options are best and can find the best rates for auto and rideshare insurance and other business insurance. Contact us to talk about car insurance today!
