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Does your car insurance cover Uber?

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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Reviewed byDaniel Walker
Licensed Auto Insurance Agenthttps://res.cloudinary.com/quotellc/image/upload/insurance-site-images/insproviders-live/ca745a12-daniel-walker.png

UPDATED: Mar 19, 2020

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The lowdown...
  • Drivers working for Uber need to acquire commercial insurance that covers ridesharing
  • Relying solely on Uber’s unique coverage plan may not be adequate and could be risky
  • Buying unique coverage from a top auto insurance coverage may prove to be a strong investment in financial security
  • Perform effective comparison shopping to locate the best ridesharing coverage

These days, one of the standard questions a representative of an auto insurance company will ask a customer applying for coverage is “Do you use your car for a ride-sharing service such as Uber?”

There is a critical reason why this question is asked. Working for a company such as Uber completely changes the delineation of coverage.

Not everyone realizes this is the case, which is a massive oversight.

A person who has been with the same auto insurance company for years doesn’t interact much with an insurance provider or even read updated contracts. The insured who decided to drive for Uber may continue the non-interaction and not contact the insurance company to make a necessary change in the policy.

Not notifying your insurance company about working for Uber can prove to be an incredibly disastrous lack of foresight.

Have you been recently employed by Uber and need better coverage? Enter your ZIP code below and compare three to four policies to find the best rates for you!

A Standard Policy vs. a Commercial Use Policy vs. a Hybrid Policy

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A standard policy for driving a car for personal use is not the same thing as a commercial auto insurance policy. A commercial auto insurance policy is designed to cover a vehicle when the car is used for the business purposes.

Obviously, picking up fares for Uber is definitely a commercial venture even when just part-time.

Still, the vehicle is not used 100 percent for business which creates a sense of confusion. Unique insurance policies have now been crafted to cover operating a vehicle for personal use and ridesharing work.

Not everyone understands the need for a revised policy. In the eyes of a driver, using the vehicle “once in a while” for a “few dollars” with Uber doesn’t rise to the level of commercial use of a vehicle.

Fact Check: What the driver considers and what the policy states are two entirely different things. Only the terms of the policy contract are what counts.

So, someone who gets into an accident while performing official work for Uber with the wrong policy is going to be in a lot of trouble.

Business Risks

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Insurance companies have a reason for charging more and adding additional terms when a car is engaged in ridesharing work.

Anyone operating a business and dealing with the public knows certain risks exists.

A person commuting to work or other mundane tasks can face typical risks on the road. Someone who uses a car for Uber work, however, is embracing far more risk.

The vehicle involved with Uber probably travels during rush hour or into heavily congested regions. Uber drivers also may be required to drive into some areas they are not familiar with. As a result, the specter of distracted driving may arise when the driver is relying solely on a GPS.

Of course, Uber drivers also must deal with passengers who could be unruly or troublesome, another source of distracted driving.

The passengers are at risk for injuries as well. An injured passenger is likely to sue in the aftermath of an accident. If the Uber driver is at fault, they are the one who ends up being sued.

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Claim Denied

When a driver causes an accident, their liability coverage is intended to cover the losses. Depending on the severity of the accident, the losses could be significant.

Property damage may cost thousands. A bodily injury claim has the potential to run into the hundreds of thousands of dollars.

Purchasing $300,000 or $500,000 in insurance coverage may provide a proper amount of liability coverage. Procuring a $1 million umbrella policy for extra coverage is also worth seriously considering.

All the coverage in the world, however, won’t help when a claim is denied because the wrong policy is in place.

If the policy is intended to solely cover personal use of a vehicle and the accident occurs during the commercial operation of the car, the odds are incredibly strong the claim will be denied.

For someone responsible for an accident, the full financial responsibility of any resulting lawsuit must be personally absorbed. This financial responsibility is how a person could find themselves in bankruptcy.

Uber’s Own Coverage Option

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Uber does offer insurance for drivers, but the policy may be woefully problematic.

The way Uber insurance is supposed to work is the coverage kicks in when the driver is “offline.” In other words, personal insurance covers the driver up until the point when the driver accepts a fair. Afterward, Uber’s seemingly comprehensive $1 million liability kicks in.

Additional insurance coverage is available through Uber as well, but most drivers probably would be better served taking out insurance from a major provider as opposed to relying on Uber’s coverage.

Uber, after all, is not an insurance agency. An insurance agency’s adjusters and attorneys are going to be quite helpful when the time comes to call on them.

Taking out a complete, comprehensive policy from a legitimate, reliable, and long-established insurance agency would probably be most beneficial. The auto insurance company can add ridesharing coverage to create a “hybrid policy” designed to cover you for both business and personal use.

The moral here is make sure the insurance company knows the vehicle is being used for Uber work, so the right coverage is in place!

Expanding the Coverage

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Liability coverage is tremendously important when driving for both personal or business use. Liability is not the end of coverage.

Other levels and layers of coverage do exist, and they are definitely worth procuring since they cover additional losses to a vehicle.

For someone who is relying on a vehicle for full-time or part-time income, the vehicle’s “going on the shelf” until repairs are made can impact income levels quite a bit, which says nothing of the costs associated with repair work.

Collision coverage helps out if a driver does damage to their own car. Comprehensive coverage addresses costly problems resulting from mishaps and other issues that damage a car through no fault of the driver or another driver.

Uninsured motorist coverage is worth seriously considering particularly when driving a lot of hours. The more time spent on the road, the greater the chances are an unexpected hazard might occur. Getting blindsided by an uninsured motorist is one of them.

A personal insurance policy expanded to cover risks associated with Uber driving does not necessarily have to be costly. If it is, maybe the time has arrived to shop around.

Look for a better policy online. The comparison process for acquiring a new policy entails providing all the necessary information requested for a quote — please don’t forget all the details about Uber!

Are you an Uber driver looking to adequately insure your car? Start comparison shopping by entering your ZIP code below and get multiple quotes today!

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