Do Rideshare Drivers Need Auto Insurance?

Why would rideshare drivers need auto insurance despite their company’s personal auto policy? It’s because the insurance policies kept in place by services like Uber or Lyft are limited and often won’t cover all situations. 

Keep reading to find out when your personal auto policy might fall short and how a rideshare insurance endorsement or a commercial auto policy can keep you protected (and legal) when you’re on the road (Need help getting the right coverage? Call Insure On The Spot at 773-202-5060 to get tailored solutions from our experts).

Why do rideshare drivers need special insurance?

Standard car insurance is designed for personal use only, which means personal auto policies usually do not cover driving for hire. Once you turn on a rideshare app and start driving to earn money, most individual policies will consider that commercial use and exclude coverage for any accidents during that time. So, if you wreck your car or cause an accident while driving for Uber or Lyft, your insurer could deny the claim for being outside of personal use coverage. Strangely, this gap surprises most drivers. One survey found that over 75% of rideshare drivers did not have adequate insurance for ridesharing, putting them at financial risk with every trip.

Another reason you need special insurance is that Uber and Lyft’s provided insurance is limited. When the app is off, you’re only covered by your personal insurance. When you go online and await a ride request, you enter a gray area where the rideshare company’s insurance offers only minimal liability and no coverage for your car. This gap means you could be driving without full insurance coverage, which is illegal under state financial responsibility laws and dangerous for your finances. If you were to have an accident in that phase, you might end up personally liable for repairs or medical bills.

This makes special “rideshare” insurance (either as an add-on to your policy or a separate policy) a must-have to fill the gaps. It ensures you’re covered at all times, including when you have a passenger en route to one or just waiting for a request. 

What do Uber and Lyft insurance cover, and what don’t they cover?

The limited and conditional coverage that Uber and Lyft provide depends on what “period” of the rideshare process you’re in. Here’s a breakdown of what Uber/Lyft’s insurance covers – and what it doesn’t cover – during each stage of driving:

As you can see, the rideshare company’s insurance mainly focuses on covering others (third-party liability) and protecting the passenger, which is important, but it leaves gaps for the driver. When you don’t have a passenger, the liability limits Uber/Lyft provide are much lower (just meeting state minimums in many cases), and your car isn’t protected. When you have a passenger, the liability is high, but you still face that $2,500 deductible before Uber/Lyft’s collision coverage helps fix your car. And Uber and Lyft provide zero coverage whenever you’re offline – it’s all on your personal policy.

What isn’t covered at all by Uber/Lyft’s insurance?

• Your own injuries (in many cases): Uber and Lyft’s policies include some uninsured/underinsured coverage and/or personal injury protection in certain states, but those may only apply if another driver is at fault or as required by law. They don’t provide comprehensive medical payments for drivers if you’re at fault (you’d rely on health insurance or personal injury protection if you have it on your policy).
  
• Car damage in Period 1 (app on, no ride): This is one of the most significant gaps. If your car is damaged while waiting for a ride request (say you get into a fender-bender or hit by an uninsured driver), Uber/Lyft won’t pay for your car’s repairs. Without the right extra insurance, you’d pay out of pocket.
  
• Anything when you’re off-app: If you haven’t toggled on the driver mode, you are purely under your personal insurance. Any accident then, is treated like everyday driving (which is why maintaining an individual policy is mandatory). If your individual policy is lapsed or canceled, you’d essentially be driving uninsured when off the app, which could lead to serious legal trouble with the Department of Motor Vehicles (DMV) if caught.

The bottom line is that Uber and Lyft’s insurance helps with major liability claims and passenger injuries, but it cannot replace your own insurance. It has significant coverage holes for the driver’s own vehicle and well-being. Your own rideshare-friendly insurance is essential to cover the portion Uber/Lyft don’t cover, such as collision damage to your car during period 1, or a lower deductible during rides, etc. You can think of the rideshare company’s policy as a safety net for others and catastrophic events, while your own policy (with a rideshare endorsement) is what keeps you fully protected.

What is a rideshare insurance endorsement (and how does it work)?

A rideshare insurance endorsement (also called rideshare coverage or a TNC driver add-on) is a special addition to your personal auto insurance policy that extends your coverage to include rideshare driving. With a rideshare endorsement, your insurance essentially says: “We will continue to cover you, just as we normally would, even when you have your app on and are working for a rideshare.”

Here’s what that means for you as a driver:

• Coverage during the “app on, no passenger” period: Normally, your personal policy would drop you once you go online for Uber/Lyft. But with a rideshare endorsement, your policy remains in effect. If you have an accident while waiting for a ride, your insurance can cover your vehicle’s damage and injuries, not just rely on the limited TNC liability. It fills that gap so you’re not left exposed. Many endorsements will ensure you have at least the same liability limits as your personal policy, even in period 1 (above the low TNC limits), for better protection.
  
• Seamless coverage with passengers too: During an actual ride, the rideshare company’s $1M liability policy is primary for third-party claims. But if, for example, you have comprehensive and collision on your policy with a low deductible, some insurers’ rideshare endorsements will cover the difference in deductibles or damages to your car. For instance, Allstate’s rideshare add-on will pay the difference between Uber/Lyft’s high deductible and your personal deductible – so if you have a $500 deductible personally, and Lyft’s is $2,500, Allstate would give you $2,000 to bridge that gap. This means you’re not stuck paying a huge amount out of pocket after an accident on a trip.
  
• No coverage gaps when offline: Even though the endorsement is mainly about your working periods, it’s attached to your personal policy, which, of course, continues to cover you when you’re off the app as usual. It’s important to note that Uber and Lyft require all drivers maintain a personal policy, which means you must have your own auto insurance to drive for them). The endorsement just ensures that one policy effectively covers you in all phases (with the TNC’s policy augmenting it when needed).

To understand this better, think of a rideshare endorsement as an insurance upgrade that upgrades your policy into a hybrid personal-commercial policy for a fraction of the cost of a full commercial plan. Without it, you’d technically need a commercial auto policy (similar to what taxis or limo drivers carry) to be fully covered – those can be very expensive (often $1,200-$2,400+ per year). By contrast, adding a rideshare endorsement usually costs just around 15% extra or roughly $10–$20 more per month on average. Some companies even charge as little as a few dollars a month for part-time drivers (for example, one major insurer’s rideshare add-on can be as low as $6 a month for qualifying drivers). The exact cost depends on your insurer, state, and driving profile, but it’s generally a minor cost increase for a major increase in peace of mind.

One thing you must remember is that a rideshare endorsement is not a standalone policy – it’s an add-on to your existing personal auto policy. That means you need to get it from the same insurance company that provides your personal car insurance. Not all insurers offer rideshare endorsements, but nowadays many do, as the big carriers have recognized the demand (Progressive, State Farm, Allstate, Farmers, USAA, and others all offer some form of rideshare coverage in many states). If your current insurer doesn’t offer it or the price is too high, shop around for one that does. Insure On The Spot is one of the providers that can help rideshare drivers secure the proper coverage – we help compare options and find you a policy that covers rideshare use without breaking the bank.

Can I get rideshare insurance without owning a car?

Yes, but it works a little differently. If you don’t own a car but want to drive for a rideshare company, you’ll need to ensure the vehicle you drive is properly insured for rideshare use. Here are a few scenarios and how insurance can work in each:

• Driving a friend or family member’s car: Perhaps you plan to use someone else’s car (with their permission) to drive for Uber or Lyft. In this case, the car’s owner will have a personal auto insurance policy on it. You should be listed as a driver on that policy, and crucially, that policy should have a rideshare endorsement if you intend to use the car for Uber/Lyft. Many insurers will only add the rideshare endorsement for the primary policyholder, but if the car owner informs the insurer that you (an additional driver) will be using the car for ridesharing, they can often accommodate that. The key is disclosure: both the insurer and the rideshare company need to know you’re using that vehicle. Keep in mind, the car owner’s rates may go up with the endorsement (just as yours would on your own car). It’s also worth noting that if the owner’s policy doesn’t allow rideshare use and you drive anyway, an accident could affect their insurance (their insurer could deny coverage or even cancel the policy for misrepresentation). Always get permission and make sure the insurance is updated accordingly before hitting the road.
  
• Renting or leasing a car through a rideshare program: Both Uber and Lyft have programs (like Uber’s partnerships with rental companies or Lyft’s Express Drive program) where you can rent a vehicle specifically for rideshare driving. These rentals usually include a form of commercial insurance as part of the package. In fact, if you rent through the official program, the car typically comes with insurance that covers you during rideshare periods (often equivalent to the standard Uber/Lyft coverage). However, there’s one downside. Renting through the official program doesn’t automatically cover you outside of rideshare use. Some rental agreements cover personal use of the car, some don’t. Be sure to read the terms. If the rental’s insurance doesn’t cover you when you’re off-app (for personal driving), you might need a non-owner car insurance policy for yourself. Non-owner insurance provides liability coverage when you drive a car you don’t own, but it usually won’t cover commercial use. This is a bit of a tricky area: if you’re exclusively using the car for rideshare and it’s a short-term rental, the provided coverage might suffice. But if you also use that rental car for personal errands, double-check if you need additional insurance for those moments. When in doubt, ask the rental program or an insurance agent what coverage is in place. The last thing you want is to assume you’re covered and find out you weren’t during an off-the-clock fender bender.
  
• Non-owner rideshare driver: Let’s say you plan to drive different cars (maybe sometimes your friend’s, sometimes a rental) but you don’t have one primary car of your own. You can purchase a non-owner car insurance policy to cover your liability when driving any vehicle not owned by you. However, non-owner policies typically do not cover commercial/rideshare use by default. They are meant for people who drive occasionally and want basic liability coverage when borrowing cars. As of now, there isn’t a widespread “non-owner rideshare insurance” product – insurance companies prefer to insure the vehicle itself for rideshare. So in practice, you’d need to rely on the vehicle’s insurance being properly extended for rideshare (as in the two scenarios above). If you anticipate driving for rideshare regularly without owning a car, it’s worth discussing with an insurance broker or company that specializes in rideshare coverage; they might help find a creative solution (for example, a commercial policy that follows the driver, but that tends to be pricey for an individual).

Quite simply, you don’t have to personally own a car to be a rideshare driver, but you do need insurance coverage that satisfies the requirements. Either the car owner’s policy must be adjusted to cover rideshare with you as a named driver, or a rental program’s insurance must cover you. Uber and Lyft will ask for proof of insurance for the vehicle you’ll be driving, regardless of ownership. It’s your responsibility to make sure that insurance isn’t just a standard policy but one that won’t void coverage when you start driving commercially. Always communicate clearly with insurers about the situation. If you’re borrowing a car, make sure the owner knows and approves; if you’re renting, understand what you’re covered for. With the right arrangements, you can absolutely drive for a rideshare without owning a vehicle – many people do this via rentals – just don’t skip the insurance step.

Do delivery drivers need rideshare insurance, too?

If you’re driving for delivery services like Uber Eats, DoorDash, Grubhub, Instacart or similar, you should also have special insurance coverage. Since most personal auto policies exclude any “driving-for-hire,” whether it’s people, packages or food, the risk of a claim denial is just as real for delivery drivers as it is for Uber/Lyft drivers.

However, there are a couple of differences in coverage to be aware of:

• Coverage from the delivery companies: Rideshare companies uniformly provide some insurance to drivers, but delivery app companies vary. For example, Uber Eats typically offers similar liability coverage as Uber’s ride service when you’re actively making a delivery (and many of Uber’s policies cover both rideshare and Uber Eats). DoorDash provides excess auto liability coverage of $1 million when you have an active delivery (but this only pays out after your personal insurance, and DoorDash’s policy might not cover any damage to your car). Some delivery services may offer minimal or no coverage for the driver’s own car. It’s important to check each company’s insurance terms. Generally, none of these companies will cover your car’s damage or comprehensive claims – those remain your responsibility.
  
• Rideshare endorsement often covers delivery too: The good news is that if you already have a rideshare insurance endorsement on your policy, most insurers extend that coverage to delivery platforms as well. In other words, the endorsement isn’t limited to just Uber/Lyft; it usually applies whenever you have a driving-for-hire app on. (Do verify this with your insurer – some might have specific wording, but many treat food delivery the same way as rideshare in terms of coverage needs.) Progressive, for instance, notes that their rideshare insurance can also apply to delivery services in many states. If you only do deliveries and not passenger rides, you still should get the endorsement because, from the insurance perspective, it’s the same kind of exposure.
  
• If you only do deliveries (and no rideshare): You might think, “I’m not transporting people, so maybe my personal insurer will be more lenient.” Unfortunately, that’s usually not the case. Delivering food or packages for pay is still a business use. Unless your insurer specifically offers a delivery driver endorsement separate from a rideshare endorsement, you’d need the same kind of extra coverage. Some insurers brand it as “business use endorsement” or have a category for gig economy drivers. Explain your situation to your agent – e.g., “I deliver for DoorDash” – and they’ll likely recommend the same solution as if you were driving for Uber: an endorsement or policy upgrade.

In short, delivery drivers absolutely need to address the insurance gap. Don’t assume your personal policy has you covered just because you’re not carrying passengers. If you get in an accident delivering sandwiches and you haven’t disclosed that commercial use, your insurer could deny the claim just as easily. The liability to others might be partly covered by the app’s insurance (if they have one), but your own car’s damage would likely be on you. Treat delivery gigs with the same level of insurance caution as rideshare gigs. The peace of mind is worth it, and an endorsement to cover both typically costs the same as for rideshare – it covers both scenarios. So, whether you’re picking up people or pizzas, make sure your insurance knows and has your back.

Frequently Asked Questions (FAQ)

Why do rideshare drivers need special insurance?

Rideshare drivers need special insurance because personal auto insurance policies don’t cover commercial activities like driving for Uber or Lyft. The moment you start using your car to earn money (whether carrying passengers or making deliveries), you enter a gap where your personal insurer can refuse coverage if an accident happens. Rideshare companies do provide some insurance, but it’s limited in terms of when it applies and what it covers (for example, only liability coverage when you’re waiting for a fare, and no collision coverage for your own car during that period). Therefore, without special insurance, a large portion of your time on the road could be uninsured, leaving you financially vulnerable. The special insurance – usually a rideshare endorsement on your policy – ensures you’re covered at all times and keeps you in compliance with the law. It’s essentially filling the holes between your personal policy and the Uber/Lyft policy so that you’re never caught without protection.

What kind of coverage does Uber or Lyft provide for drivers?

Uber and Lyft provide contingent insurance coverage that kicks in when you’re using their app, but it varies by phase:

• When you’re waiting for a ride (app on, no passenger), they offer limited liability coverage (around 50/100/25 in most states – that’s $50k per person for injury, $100k per accident, $25k property damage). This covers damage you might cause to others. They do not cover your vehicle in this phase.
  
• When you’ve accepted a ride and have a passenger, they provide a $1 million liability policy at minimum to cover injuries or damage you might cause. They also include uninsured/underinsured motorist coverage for you and your passengers’ injuries if a third party is at fault and lacks adequate insurance. For your own car, Uber/Lyft have contingent collision/comprehensive coverage, but only if you have those coverages on your personal policy, and there’s typically a large deductible (e.g., $2,500) you must pay.
  
• When you’re offline (app off), Uber/Lyft provides no coverage – you rely entirely on your personal insurance.

So, while Uber/Lyft’s insurance covers third-party liabilities and provides major coverage during trips, it does not cover everything. Notably, your personal injuries and your vehicle’s damage in some situations are not fully covered. That’s why you still need your own insurance to complement what Uber and Lyft provide.

What is a rideshare endorsement?

A rideshare endorsement is an add-on (endorsement) to your personal car insurance policy that extends your coverage to include rideshare or delivery driving. It essentially upgrades your personal policy to cover you during the periods your rideshare app is on. Without it, your personal policy would typically exclude any incidents that occur while you’re driving for hire. With a rideshare endorsement, if you get into an accident while waiting for a passenger or even during a trip, your own insurance can step in to cover things that the rideshare company’s insurance might not (such as damage to your car, or a higher amount of liability coverage). It closes the gap between personal use and commercial use. This way, you don’t need a separate commercial auto policy; the endorsement makes your existing policy function for both personal and rideshare driving. It’s usually much cheaper than a separate commercial policy, and it’s tailored for people who use their personal car for services like Uber, Lyft, DoorDash, etc. In short, a rideshare endorsement means one policy covers you whether you’re driving privately or for work.

Can I drive for Uber or Lyft with just my personal insurance?

Technically, no – and it’s very risky to try. Uber and Lyft require that you have a personal auto insurance policy, but that alone is not enough if it doesn’t cover rideshare use. Most personal insurers will not cover any accidents that happen while you’re “driving for hire.” If you only have a standard personal insurance and you get into an accident during an Uber/Lyft trip (or even while waiting for a ride request), your insurer could deny the claim and even cancel your policy for violation of terms. Meanwhile, Uber/Lyft’s insurance would cover some third-party damages, but, for example, your own car’s damage might not be covered at all in certain periods. Essentially, just personal insurance leaves you with significant gaps in coverage. The right approach is to inform your insurer that you’ll be rideshare driving and obtain the appropriate rideshare endorsement or policy. That way, you’re properly insured. Driving for Uber or Lyft on a normal personal policy without telling your insurer is effectively like driving uninsured part of the time – it’s not recommended and could lead to large out-of-pocket costs or legal troubles if an accident occurs.

How much does rideshare insurance cost?

The cost of rideshare insurance (adding a rideshare endorsement) varies, but it’s generally affordable. In many cases, it will add a modest amount to your premium, often around 15% more than your regular policy cost. For some drivers, that might be only an extra $10–$20 per month, depending on your insurer and coverage. Some insurance companies have very low-cost endorsements (for example, a few dollars a month in certain situations), especially if you’re a part-time driver. On the higher end, a more comprehensive hybrid policy could be a bit more, but still far less than a full commercial policy. By contrast, a commercial auto policy (the alternative for full coverage) can easily cost over $100 a month, so the rideshare add-on is a cost-effective solution. Remember that that factors like your location, driving history, and how often you drive can influence the price. The best approach is to get a quote for adding rideshare coverage to see the exact difference. In short, expect your insurance to go up a little with rideshare coverage, but not prohibitively. Many drivers find that the extra cost is worth the peace of mind and the protection of having no coverage gaps while working. Always compare insurers if one gives a quote that seems high; multiple companies are now offering rideshare insurance, and Insure On The Spot can help you find a competitive rate for the coverage you need.

Ready to protect yourself on the road? Auto insurance for rideshare drivers is an evolving market, but one thing is constant: you should be fully insured every time you drive for a service like Uber or Lyft. Don’t wait until after an accident to realize you lacked proper coverage. Insure On The Spot is here to help rideshare drivers secure affordable policies that cover them in every situation. We offer free quotes in just minutes – you can fill out a quick online questionnaire or call us. Get started now and drive confidently, knowing Insure On The Spot has your back on every trip!