Do Uber Drivers Need Commercial Insurance?

There is little question that Uber has swept the nation regarding the services provided. One important question that has been raised is whether Uber insurance for drivers is needed?

Select Your State:

What is Uber?

A Woman Using Uber app inside Car

Image Source: Uber.com

This is essentially a ride-sharing service that operates in a similar fashion to taxis and black car service companies. An individual simply hails an Uber driver from their smartphone app to take them to a destination. This service is generally far less expensive than traditional taxis and many people around the country make extra money as Uber drivers.

Because of its popularity, Uber has become quite popular in terms of helping average people put extra money into their pocket through this service. However, what type of insurance is required for those who drive for Uber?

Insurance Requirements:

Standard Uber driver insurance requires that all vehicles have the state minimum insurance and provide supplemental coverage. However, that additional coverage only applies when the Uber app is on. This means that when the Uber app is activated and the trip accepted, a higher level of coverage over the state minimum is now required.

This higher level of insurance is required from the time the trip is accepted until the passenger leaves the vehicle.

The level of higher coverage, however, will depend on the state in which the Uber driver resides and operates their vehicle.  However, some states require a $1 million excess liability coverage above and beyond your personal auto insurance, but it cannot be used to cover your vehicle.

Is Commercial Insurance a Requirement?

The truth is that services like Uber are still so new that virtually all states have no specific rules or regulations about insurance requirements. While having Uber commercial insurance is a good idea, particularly for UberX drivers who tend to carry more passengers than standard Uber drivers, commercial insurance is not a requirement.

You will need to check with your state’s insurance requirements in terms of what is needed while being an Uber driver. Some insurance companies are now offering what is known as “ride-sharing” insurance which is somewhat between personal auto and commercial insurance. This means that it provides some of the coverage as commercial insurance but at much lower rates.

This may be the perfect solution for Uber drivers looking for additional protection, but being inexpensive enough to not significantly cut into the profits made from this service.

Should You Get Commercial Insurance?

The answer will depend in large part on your state’s requirements which in most cases may be changing soon. When you consider the overall cost of commercial insurance for your vehicle, it should be compared to the amount of money you make from being an Uber driver. The difference between profits and price should be the determining factor when it comes to selecting commercial insurance.

Until the requirements change, you may be best served by obtaining ride-sharing insurance that is available from various insurance companies. It bridges the gap between commercial insurance and standard car insurance while still being quite affordable.