Lyft Insurance Explained

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When it comes to making some side money or just paving your own way, Lyft provides a great opportunity for many people throughout the country. With over 1.4 million drivers, they must be doing something right. However, if you’re considering driving for Lyft, you’ll need to figure out the right type of insurance for you, as Lyft requires all their employees to carry their own insurance.

The topic of insurance creates somewhat of a grey area with drivers. Since most drivers are considered independent contractors instead of employees, insurance can be a bit confusing. In general, Lyft has company liability, collision, and comprehensive insurance for their drivers. All of these insurances come with coverage gaps, which result in higher out-of-pocket expenses for drivers.

It All Starts With The Driver’s Status

Any personal injury attorney will tell you that accident coverage depends on the status that rideshare companies tend to place their drivers into. These include the following:

  • Period 0 – Waiting for a ride request with the app on
  • Period 1 – On the way to a pick-up location
  • Period 2 and 3 – Having a passenger in the car

These statuses make a big difference in the amount of insurance coverage that Lyft offers its drivers. As a side note, it’s very imperative that you understand that your personal insurance policy is only active when your Lyft app is turned off. They will typically not cover an incident that occurs when you’re actively working for Lyft.

A Closer Look At What Lyft’s Insurance Covers

As you learned above, the amount of insurance coverage that Lyft offers will highly depend on what status you’re in. The least amount of coverage is available for drivers who have the app on and are waiting for a pick-up request. Lyft’s collision and comprehensive coverage kick in during the other two statuses. For review, this is when the driver is actively on the way to pick the client or has the client in the car.

The App Is On And You’re Waiting For A Pick-Up Request

Lyft currently offers a liability limit of $50,000 for bodily injury per person. Their coverage extends to a maximum of $100,000 per incident. This protection also covers property damage up to $25,000. This is liability coverage only. This means that you’ll be responsible for your own medical bills and damage to your vehicle if an incident occurs.

To put this into perspective, we’re going to compare these coverages to what a regular insurance company would recommend. An insurance company would recommend $100,000 of bodily injury per person for up to $300,000 per accident. When it comes to property damage, insurers recommend $100,000. As you can easily tell, Lyft’s insurance coverage for both bodily injury and property damage is considerably less than what insurance companies recommend.

On The Way To Get A Client Or Driving With A Client In The Car

Accident injury attorneys report that Lyft’s comprehensive and collision coverage becomes in effect once a driver is in one of the two statuses mentioned above. To be eligible, however, the driver must have both comprehensive and collision coverage on their vehicle as well.

Both Lyft and Uber offer $1 million dollars in coverage for liability. However, it’s important to be aware of the fact that this type of coverage comes with a fairly high deductible of $2,500. This means that most drivers will incur a big out-of-pocket expense before Lyft’s insurance policy will actually kick in to cover the results of the incident.

Understanding The Coverage Of Your Personal Policy

Any injury attorney will reveal that your personal auto policy doesn’t usually cover accidents that happen while you’re working for Lyft. Using your vehicle for transporting clients is considered a commercial activity, which most providers don’t cover. In order to have proper coverage, you’ll need to obtain a commercial policy. This can be done via signing up for a new policy or adding an endorsement to your existing auto insurance policy.

Regular auto insurance policies don’t cover these types of accidents because insurance companies believe that exposure to commercial operation requires a higher premium. This comes down to the fact that Lyft drivers are more exposed to being involved in an auto accident than the average joe. Your insurance provider requires a commercial policy so they can mitigate that risk.

A Quick Note About App Status

The status of your app can make or break your personal policy coverages. If your app is turned on, regardless of whether you’re intentionally working or not, your personal insurance doesn’t kick in. In the event you’re in an accident, your car crash attorney will proceed to contact Lyft to discover if you had the app on at the time of the accident or not.

Purchasing Commercial Insurance

Making the decision to purchase commercial insurance or a rideshare endorsement is highly recommended by traffic collision attorneys. This type of insurance works great to fill the gap between Lyft’s coverages. Even Lyft car accident lawyers recommend commercial insurance coverage for their drivers.

The price of this commercial insurance policy or add-on is going to highly vary depending on the individual lender. Most major insurance providers offer this type of insurance. The major benefit that you’ll find with having this type of insurance policy or add-on is that your deductible will be much lower. Major insurance providers like Geico and State Farm offer commercial coverage with very low deductibles.

When purchasing additional insurance, you may just decide to find a provider who will give coverage for that first status. This is when you have your Lyft app on and are waiting for a pick-up request. Companies like Farmers and USAA offer policies for this specific working status. Drivers can benefit from getting this type of insurance as waiting on customers is the riskiest time at work. This is due to the fact that Lyft’s insurance coverage limits are much lower during this time than any other working status.

Hiring an Attorney 
While these hefty numbers may seem like Lyft put in a lot of effort to protect their drivers, you’’ll find that they do anything to shift liability away from themselves and onto you.

Since your financial concerns are top of mind after an accident, it’s understandable to be nervous about hiring an attorney. However, Accident Lawyers Firm keeps your financial situation top of mind in our operations. We offer free consultations, and you don’t have to pay us unless we win your case.