Rideshare Insurance in North Carolina
The Importance of Rideshare Insurance
Rideshare and transportation network companies have gained popularity in the past few years. Since companies like Uber and Lyft don’t offer full coverage for the entire duration of a rideshare trip, insurance companies have started to offer special gap insurance. This type of gap insurance is called rideshare insurance. It offers full liability and bodily injury insurance for the duration of the trip that is not covered by the rideshare company.
Drivers working for rideshare companies need to be cautious about their insurance coverage. Standard insurance does not cover rideshare employees. If you work for Uber or Lyft, you’ll need a special rideshare insurance policy. Failing to do so could mean losing your current auto insurance coverage, paying higher premiums, and taking over responsibility for repairs in the event of a collision. If you work as a rideshare driver without telling your insurance company, they may revoke your coverage.
Rideshare insurance is divided into three different periods. These include:
- Period 1 – online, without a ride request
- Period 2 – online, on the way to a ride request
- Period 3 – online, driving with customers
Uber and Lyft cover the last two periods, but not the first. This leaves a coverage gap where drivers are vulnerable to out-of-pocket costs during the first period. Although rideshare-friendly policies are not available in all states, options continue to become more widespread. North Carolina has a few companies that offer rideshare-friendly coverage online.
The first period is when the driver turns the app on and is waiting for a ride request. This is the time frame when drivers need rideshare insurance. If you are driving during this time and have an accident, you’re only partially covered by the rideshare company. Most personal auto insurance policies don’t cover rideshare driver and will most likely discontinue your policy. Should damages exceed the partial coverage limits, the driver will be responsible for paying the remaining difference. This makes an additional rideshare policy invaluable for Uber and Lyft drivers.
There are three basic choices for rideshare insurance:
- Coverage for Period 1 only – some newer policies offer coverage for the gap in Uber and Lyft’s policies. This is the best option for liability and collision coverage that compliments coverage offered by the rideshare company. Some major insurance companies offer this special coverage option. However, it is not available through North Carolina companies at this time.
- Commercial vehicle coverage – Often costing over $500 per month, this option is the most expensive and impractical. However, drivers have peace of mind knowing that they have double coverage in the event of a collision. In states without rideshare insurance options, commercial coverage may be the only way to gain full coverage.
- Rideshare-friendly policy – This type of policy offers a rideshare endorsement on your policy, but it doesn’t offer any gap coverage. However, a rideshare-friendly policy will not cancel your coverage if you are driving for Uber or Lyft. This type of policy is perfect for rideshare drivers who remain stationary during Period 1. This is currently the most common form of coverage for rideshare drivers.
Several states have already changed laws to require rideshare companies to offer primary liability insurance during period 1. However, most states have not yet made changes. Also, primary liability insurance is often not sufficient, and drivers must seek secondary insurance elsewhere.
As transportation network companies, such as Uber and Lyft, increase in popularity, laws, and insurance policies are bound to undergo changes. Several states are already changing legislation on rideshare insurance requirements, and other states are sure to follow soon. It’s important to stay up-to-date on rideshare insurance trends since they can change frequently.
Before you begin working for a rideshare company, it’s highly advisable to consult your current auto insurance provider. They can tell you in a rideshare endorsement is available for your vehicle or if they have rideshare-friendly policies.
Currently, there are no major car insurance providers that offer rideshare policies in North Carolina. However, in recent years, many large insurance companies have started expanding their coverage options to include rideshare drivers. There are a number of online companies that offer affordable rideshare gap policies in North Carolina. Should these policies not meet your needs, commercial coverage may be the only way to gain full coverage.
With rideshare insurance coverage lacking in North Carolina, drivers will have to take what they can get. Although rideshare drivers in North Carolina may have to pay a bit more, the dangers of driving without insurance protection far outweigh the costs.
State Farm and Liberty Mutual are two companies that will not cancel rideshare drivers. However, they don’t offer rideshare insurance policies in all states, including North Carolina.
Insurance for Uber Drivers
Uber has a $1,000 deductible for damage to your vehicle during Periods 2 and 3. The rideshare company offers $1.5 million in liability insurance in North Carolina. In addition, Uber offers $1 million in uninsured motorist injury coverage. Contingent collision and comprehensive insurance covers physical damage caused during a drive and comes with a deductible. Uber insurance covers $25,000 in property damage and $50,000 in injury liability per person, up to $100,000.
Uber offers third-party liability insurance during periods 2 and 3. This covers up to $1 million in damages when the driver is at fault. They also have uninsured motorist bodily injury coverage up to $1 million. This protects Uber drivers in the event of a collision with an uninsured driver. Uber covers hit and run accidents when the guilty party cannot be identified.
However, drivers are responsible for obtaining rideshare insurance during Period 1. It used to be tricky, if not somewhat expensive to find an insurance company that offers rideshare-friendly policies. Details about Uber’s insurance policy can be found at the Uber website.
Since the end of 2016, many new insurance providers have started offering rideshare policies. Uber drivers in North Carolina now have more affordable options to choose from online.
Insurance for Lyft Drivers
Lyft drivers can conveniently locate the details of their rideshare insurance policy directly from the App. As long as drive mode is turned off, Lyft drivers must rely on their personal insurance coverage. Drivers are covered by Lyft’s contingent liability policy when drive mode is on, but no ride has been accepted. Lyft has a $25,000 limit on property damage and $50,000 per person limit for personal liability, up to $100,000. This liability insurance covers drivers and passengers in the car throughout periods 1, 2, and 3. Similarly, the policy has a $1 million limit for each accident. Contingent collision coverage covers repairs or replacement of your vehicle, regardless of which driver was at fault. However, Lyft’s deductible is somewhat higher than Uber’s at $2,500. Lyft’s insurance policy covers uninsured motorist accidents up to $1 million.
Lyft drivers have limited liability coverage during the first period. Lyft is now working together with Hertz to offer drivers coverage, even when the Lyft App is turned off. This primary auto liability coverage is available through your rental agreement. A similar policy is offered through GM. Rideshare drivers can read about Lyft insurance policies on their website.
Rideshare Drivers in North Carolina
If you’re a rideshare driver in North Carolina, there are several new online insurance companies specializing in rideshare insurance. Since rideshare policies and endorsements are still uncommon in North Carolina, it may take some searching to find a suitable policy. This means you may have to pay whatever price the insurance company demands. However, drivers should stay up-to-date on current offers, since insurance companies are always adding new policies.
If you’re unable to obtain rideshare insurance in North Carolina, commercial insurance may be the best alternative to full coverage. Since this type of insurance can cost ten times more than a rideshare policy, this isn’t the most practical coverage. However, if you’re uncertain about trusting an online company, this may be your last option.
If you choose to forego rideshare insurance, there could be costly consequences. Rideshare companies only offer partial coverage, which could leave you paying the difference out-of-pocket. While rideshare companies will pay liability insurance during period 1, they don’t offer collision insurance for this period. If you get into an accident during this period, you’ll most likely be responsible for your car’s damages.
As ridesharing becomes more common, insurance providers will start including rideshare insurance options as part of the standard offering in all states. However, no matter how sparse options may seem, driving without sufficient insurance could threaten the safety of your financial future. Until more abundant choices are available, rideshare drivers will have to take one of the few available options or opt for a commercial insurance policy.