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Should Uber and Lyft Drivers Get Livery Insurance?

Should Uber and Lyft Drivers Get Livery Insurance?

It can be easy to become confused by the amount of insurance options available to drivers. This can become even more complicated when you become a rideshare driver. As we’ve already discussed, some insurance companies will simply drop you from their policy, if they find out that you are driving for services such as Uber of Lyft.

Due to this, it is incredibly important that you plan ahead, if you decide to sign up with one of these rideshare companies – be it Uber, Lyft or another. A question that is often asked, is whether it is worth taking out livery insurance. This, is a bit different from the bog standard car insurance most of us have and it’s similarly different from commercial insurance plans. How so? Well, let’s take a look.

What is the difference between Commercial and Livery Insurance?

Typically, commercial insurance will cover your vehicle if it used for business purposes. This can range from cars used exclusively for business purposes (travelling salesmen and estate agents) to trucks (delivery vans, contractors and tow trucks) and for-hire services such as limos. Livery insurance, on the other hand, is aimed at and will cover for-hire services such as limos and taxis – as well as Uber and Lyft.

Can I not use my Commercial Insurance for Uber and Lyft?

This really depends on the commercial insurance policy you have and with which insurance firm you have it with. It is vital that when signing up for a commercial insurance plan that you enquire as to whether it will cover you as a driver for Uber or Lyft.

Those who already have a commercial insurance plan – and only assume it does – should speak to their carrier as soon as possible, to confirm. Only by speaking to an agent, can you ensure that it does. Otherwise, you might not be covered.

It is worth noting that commercial insurance policies are tailored on a case-by-case basis. This means that the rate you will pay will vary depending on your specific needs and requirements. However, you are not required to have a commercial insurance plan to drive for either Uber or Lyft, both of whom have their own insurance policy to cover you.

Should I sign up for Livery Insurance? Probably not

For the majority of rideshare drivers, the obvious answer for this question would be a flat-out no. There’s many reasons to back this statement up, including the fact that most drivers won’t earn enough to actually justify the cost of livery insurance. When considering livery insurance it is worth taking into account the following:

  • It can be complicated to arrange a policy in a number of states and cities
  • You will be required to update your paperwork and change your plates
  • Cover might not be available for cars on lease; or if you have a loan on the vehicle
  • Uber and Lyft already offer the same coverage, at no additional charge

If that wasn’t enough of a reason to turn you away from debating whether you need livery insurance or not, perhaps the cost will. This type of insurance can range anywhere from $6,000 – $10,000 a year for a car worth $10,000 – $20,000. There’s very few drivers for either Uber of Lyft that will be able to earn enough to cover that, along with all of their other expenses.

So, are there any benefits to having Livery Insurance?

Yes. At least, that’s the simple answer. Though, for the price, many might not consider it much of a benefit. As both Uber and Lyft already provide liability coverage to their drivers, you will not be receiving any additional benefit from having livery insurance on this front. However, you will benefit from collision coverage. In this case, it will truly be up to you to decide whether this is a must-have or not. We expect most people, will not find it essential, however.

Do I really need collision coverage? What are the chances of me needing it?

This is tricky question to answer and one that really needs to be decided on a person-to-person basis. We can’t answer it for you, but we can provide some statistics to back up the likelihood of you theoretically not needing it, though. Because, after all, who doesn’t love some decent stats, right?

According to official data, in 2009, Americans drove approximately 3 trillion miles. During this time, a total of 10.8 million accidents occurred. That’s roughly one accident every 300,000 miles. Insurance firm State Farm has stated that a driver will typically make an accident claim once every 17 years – or close to that number, at least. That all adds up pretty well. Furthermore, the average vehicle collision claim was $2,950 in 2012, according to the RMIIA.

This means, theoretically, that if you were to operate as a rideshare driver under an eight hour shift, and were to drive approximately 150 miles during this time, then this would equal about 50,000 miles a year. Taking this into account, and if this were true to form, the average driver would find themselves in an accident once every six years or so. Even if you double this rate, you’d still only enter one every three years, with damage fees of under $3,000.

So, what does all of that mean, and why shouldn’t I get Livery Insurance to cover me?

Let’s explain it in its simplest form. Why would you choose to pay upwards of $6,000 for livery insurance every year, when the likelihood of you incurring damage costs of more than $3,000 over a period of several years is incredibly low? It simply doesn’t make sense, especially when you are covered by Uber and Lyft for liability.

There are some situations where it might be wise to get livery insurance – that is certainly true. If your vehicle is expensive – let’s say over the $20,000 – then it might make sense. This would avoid having to pay out a hefty bill if you encounter damage through a collision. For those who plan to driver for Uber and Lyft, however, the additional cost, is a pitfall to avoid.

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