Are Rideshare Drivers on the Road to Financial Ruin?
Being a rideshare driver can be a great way to meet people and make money. But overlooking this one thing could cost you thousands.
Driving for a rideshare company sounds great on the surface. You set your hours, meet people from all walks of life and earn money in the process.
If you're a college student or a retiree wanting to get out of the house more, you might consider it as a viable option. While it can be for many, there are some things you should consider before taking the plunge.
For starters, you'll need to use your vehicle for rides and deliveries. Over time, the wear and tear from the miles can reduce your earnings further with oil changes, ample trips to the gas station, tire and brake replacements and other repairs eating into your bottom line.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, there's an even more critical element that relates to your car insurance.
The startling truth about insurance and ridesharing
Being a rideshare driver means you're driving more miles, putting you at risk for more accidents.
A University of Illinois at Chicago study found that one in three rideshare drivers had been involved in an accident. Depending on when the accident happens, it can make a huge difference in your financial protection.
Say you're starting work for the day and driving around awaiting your first rider. As you move around the neighborhood, a car pulls out suddenly in front of you, and even with quick reflexes, you're unable to stop in time, slamming into the vehicle.
The other driver has injuries and significant damage. Your vehicle has seen better days. Then you're surprised to find you're on the hook for damages to your car because your regular policy doesn't cover ridesharing.
Why? Because your regular policy is for personal use only, not commercial, which is what you would be using it for if you drove for Uber or Lyft.
While both provide limited liability coverage during this time, it's for other drivers. If your vehicle becomes damaged or you incur any injuries resulting from an accident, you could be on the hook for these costs if you haven't notified your insurance that you intend to use your covered vehicle for ridesharing purposes.
That means you could be without a car if you can't afford repairs, and if you're hurt, you could incur significant medical debt.
Thankfully, you can add rideshare coverage to your existing auto insurance policy. The best way to save money on insurance is to shop around. Use the tool below to explore some of today's best car insurance offer, powered by Bankrate:
How much does ridesharing insurance cost?
Insurify has a tool that lets you compare rideshare insurance costs in your area. They pool quotes from top providers, such as Allstate and Progressive, to help you see how much you'll pay. Keep in mind your costs vary based on where you live, what you drive and your driving history.
It’s important to note that this extra coverage is only needed during the period when you’re logged into a rideshare app but haven’t yet accepted a trip.
Once you accept a ride request, companies such as Uber and Lyft provide more comprehensive coverage that extends to you, your vehicle and other motorists if an accident occurs.
What does ridesharing insurance cover?
Adding rideshare insurance is integral to protecting your finances. Here are some of the coverages it includes:
- Liability coverage: Covers damage and injuries that another party incurs resulting from an accident.
- Comprehensive and collision coverage: Covers you financially if your vehicle incurs damage from an accident, weather or theft.
- Uninsured/underinsured motorist protection: If a driver hits you and doesn't have insurance or their coverage is inadequate, this bridges the gap to ensure you receive the financial assistance you need.
- Deductible reimbursement: It's an optional policy that covers the difference between the ridesharing's deductible (often around $2,500) and your policy's deductible to lower your out-of-pocket costs. What is a deductible in car insurance? It's the amount you must pay before your carrier pays its share of the claim.
- Additional coverage: You can also add on coverage for roadside assistance, rental car reimbursement and more.
A driver's checklist before doing ridesharing
Before signing up, read the qualifications of the provider to ensure you qualify. This is particularly the case for college students, as Uber requires a year of driving experience before being approved.
Once you qualify, reach out to your insurance carrier. Many of the top carriers allow you to change coverage in their app, or you can call to request ridesharing coverage. Ask them what their policy covers and any additional coverages you might want to consider.
Ultimately, while it's an extra step, securing coverage for ridesharing is integral. It bridges the gap between the lapses in coverage for when you're awaiting work and when you're working.
This will protect you financially from having to pay significantly out-of-pocket to repair or replace your vehicle and any other bills that arise.
Related content
-
Why Some Michigan Tax Refunds Are Taking Longer Than Usual This YearState Taxes If your Michigan tax refund hasn’t arrived, you’re not alone. Here’s what "pending manual review" means and how to verify your identity if needed.
-
If You'd Put $1,000 Into Caterpillar Stock 20 Years Ago, Here's What You'd Have TodayCaterpillar stock has been a remarkably resilient market beater for a very long time.
-
Good Stock Picking Gives This Primecap Odyssey Fund a LiftOutsize exposure to an outperforming tech stock and a pair of drugmakers have boosted recent returns for the Primecap Odyssey Growth Fund.
-
5 Laundry Habits That Are Costing You MoneyYou might be flushing money down the drain if you have any of these laundry habits.
-
My First $1 Million: Banking Executive, 37, NashvilleEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
10 Decluttering Books That Can Help You Downsize Without RegretFrom managing a lifetime of belongings to navigating family dynamics, these expert-backed books offer practical guidance for anyone preparing to downsize.
-
New Ways to Keep Your Online Accounts SafeAs cybercrime evolves, the strategies you use to protect yourself need to evolve, too.
-
Can Your Car Insurance Add Strangers to Your Policy? A Florida Class Action Lawsuit Could DecideA Florida driver says GEICO added complete strangers to her car insurance policy and jacked up premiums as a result.
-
Life Loves to Throw Curveballs, So Ditch the Rigid Money Rules and Do This InsteadSome rules are too rigid for real life. A values-based philosophy is a more flexible approach that helps you retain confidence — whatever life throws at you.
-
The Best Short-Term CD for Your Cash in 2026This strategy can help you earn thousands in months.
-
What Is an Assumable Mortgage and Could It Save You Thousands?With mortgage rates still elevated, taking over a seller’s existing home loan could lower monthly payments — if the numbers work.
