Understanding Independent Contractor Insurance for Rideshare Drivers

As a rideshare driver, you switch between using your car for personal reasons and passenger pickups. When you’re off the clock, your personal auto insurance policy helps protect you on the road. However, it stops providing coverage when you use your car for business.

With an independent contractor insurance endorsement for your rideshare activities, you can extend coverage to when you’re working. Learn how rideshare insurance works, what it covers, and why it’s essential for rideshare drivers.

The Basics of Independent Contractor Insurance for Rideshare Drivers

Rideshare drivers who work as independent contractors have unique insurance needs. Understanding the basics can help you make an informed decision about insurance coverage.

Independent Contractor Insurance vs. Employer-Provided Insurance

Employees of a company typically receive insurance coverage from their employer, while independent contractors are considered separate entities from the contracting company. Independent contractors need their own coverage for liability, bodily injury, and reputational harm to prevent financial loss while working.

Despite not being employees, drivers of transportation network companies (TNCs) do receive some on-the-job coverage. TNC coverage generally helps pay if you get into an accident while a passenger is in your car. The downside of TNC coverage is that it typically comes with a high deductible that drivers are responsible for paying, and it may not provide any coverage when you’re waiting to pick up a passenger.

What Is Rideshare Insurance?

Rideshare insurance offers comprehensive and collision coverage for drivers during periods when their personal auto insurance and TNC insurance don’t apply. For example, your rideshare coverage may kick in when you’re:

  • Driving around waiting for a ride request
  • Driving to pick up passengers
  • Transporting passengers

Understanding the Need for Rideshare Independent Contractor Insurance

Here are a few factors that make independent contractor insurance for rideshare drivers a necessity:

The Limitations of Personal Auto Insurance Policies

Most personal auto insurance policies only cover private passenger vehicles driven for personal use. A personal policy won’t cover damages when a vehicle is used for commercial purposes.  

For example, a standard auto policy likely won’t cover:

  • An accident with injuries to passengers while transporting a customer
  • A fender bender in a parking garage while waiting to pick up a ride request
  • Theft or damage to the vehicle while parked between rides

Without rideshare coverage, the independent contractor is liable for damages. While TNC coverage can help, drivers may have to cover certain expenses or a costly deductible.

The Risks Associated with Rideshare Driving

As a rideshare independent contractor, you spend more time on the road than the average driver. You may also drive frequently during the period when most accidents occur—between 4:00 and 8:00 PM, according to the National Safety Council. While driving in unfamiliar or urban environments, you may be more at risk of a car accident.

The National Safety Council reports that an accident that only causes property damage to your vehicle costs $6,100 on average, while accidents with injuries can reach five and six figures. Adding a rideshare endorsement to your personal auto policy can help you avoid draining your savings for an unexpected accident.

What Does Rideshare Insurance Cover?

Rideshare insurance can cover various costs, from vehicle damage to rental car reimbursement. What you’re doing when the accident occurs will help determine if your TNC coverage or rideshare endorsement will apply.

For example, when you have the app open to wait for a ride request, your rideshare insurance may cover:

  • Comprehensive (damage to your vehicle not in an accident)
  • Collision damage
  • Bodily injury
  • Medical payments
  • Damage to another vehicle
  • Uninsured and underinsured motorists
  • Rental car reimbursement

When you’re en route to pick up a passenger, your TNC coverage may or may not apply. If it doesn’t, your rideshare insurance will typically cover the above. When a passenger is in your vehicle, rideshare insurance can help cover what your TNC coverage doesn’t, such as roadside assistance.

Your rideshare policy may also cover some of the deductible in your TNC’s commercial auto insurance policy that you’re required to pay if an accident occurs. For example, your rideshare coverage may pay $1,000 of your TNC policy’s $1,500 deductible, bringing your contribution down to just $500.

The specifics of your coverage will depend on what’s covered in your personal auto policy and TNC policy. For example, if you don’t have uninsured and underinsured motorists coverage in your personal policy, your independent contractor insurance won’t cover it, either. Additionally, some TNCs provide coverage when a driver is en route to pick up a passenger, while others only cover the period when a passenger is in the car.

Don’t risk paying out-of-pocket for a rideshare-related accident. McGhee Insurance Agency can keep you covered with personal auto insurance and a customized rideshare endorsement.

How to Choose the Right Independent Contractor Insurance for Rideshare Drivers

Finding the right rideshare insurance policy can make a substantial impact if an accident occurs. These steps can help you get covered:

Examine Your Personal Auto Policy

Before you add a rideshare endorsement, it’s essential to understand what your personal auto policy covers. If you don’t currently have roadside assistance on your personal policy, for example, your rideshare endorsement won’t include it. Consider adding any coverages you don’t have that would be helpful when you’re on the clock.

Look for Coverage Gaps

Between your personal policy and TNC coverage, it may seem like you’re covered in every scenario. However, you may have coverage gaps when you’re getting ready to work but haven’t yet picked up a passenger. Look to see if you’re covered during downtime, when you’re headed to a passenger pickup, and when a passenger is in your car.

Contact Your Insurance Agency

To help identify your risks, negotiate with insurance companies, and secure the most cost-effective coverage for rideshare drivers, turn to an insurance agency. Their insurance experts can guide you through the process of getting covered and make recommendations to further reduce your risk.

Turn to McGhee to Explore Your Rideshare Insurance Options

Adding an independent contractor insurance endorsement to your personal auto policy is a simple yet highly effective way to help cover your risks as a rideshare driver. At McGhee Insurance Agency, we can help you secure the most comprehensive and cost-effective personal insurance and add a tailored rideshare endorsement for your business activities.

Whether you’re a seasoned rideshare driver or considering your side gig options, McGhee Insurance is here to help guide you through your insurance options. Reach out today to learn how we can help protect you as an independent contractor.

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