Uber Driving: Insurance Considerations and Coverage

Driving for Uber can be a rewarding way to earn extra income, but it comes with its own set of insurance requirements and considerations. Many drivers wonder about the financial burden of insurance, particularly regarding the types of policies they need and the costs involved.

Liability Insurance Provided by Uber

Uber and some other ride-sharing companies in certain regions, such as the United States and Canada, provide basic liability insurance for their drivers. For example, liability coverage ensures that you and your passengers are covered if you are involved in an accident. However, this coverage often does not extend to physical damage to your car, which is a significant concern for many drivers.

Additional Insurance Riders

Over the past few years, there has been a growing trend of auto insurance companies offering policy riders that cover physical damage to your vehicle if you are in a collision and at fault. These riders can add a considerable amount to your annual premiums—in some cases, 6-8 percent on top of what you already pay for basic coverage. It is crucial to inform your auto insurer that you are engaging in rideshare work, as failure to do so can result in the cancellation of your policy and higher insurance premiums.

Commercial Insurance (Hire and Reward)

When driving for Uber, commercial insurance, also known as chauffeur insurance, is often a necessity. This type of insurance is significantly more expensive than personal insurance. Commercial insurance is designed to cover a higher number of journeys, which represents a much greater risk. It also covers public liability and passenger personal injury to a much higher extent than private insurance. Unlike personal insurance, commercial insurance does not benefit from a “No Claims Discount” or “No Claims Bonus.”

Impact on Personal Insurance

If you use your personal vehicle to operate as an Uber driver, your personal insurance premium will increase. This is because commercial use of a vehicle typically carries a higher rate due to the increased frequency of driving and the potential for passenger-related liabilities. Insurers use underwriting guidelines to determine premiums, and one of the factors is the way the vehicle is used.

Conclusion

Driving for Uber requires careful consideration of your insurance needs. While Uber and other ride-sharing companies provide liability insurance, additional coverage like policy riders and commercial insurance are essential to protect yourself and your vehicle. It is important to consult with your insurance company to understand the specific requirements and financial implications. Failure to do so can lead to policies being canceled and higher premiums, which can be a significant burden for drivers.