California Rideshare Insurance Laws for Uber and Lyft Drivers

April 30, 2018

catching a ride with uber
They are everywhere. Uber cars. Lyft cars. Gett, Juno, Curb, Sitbaq, Via, Summon, and more!

Each of these vehicles is driven by a private driver who is, often, working on a part-time basis for the company to get you where you need. The big question is, what are the rideshare insurance requirements for drivers in California?

How Rideshare Works

Because Uber is the by far the biggest of these companies, we will look at Uber insurance requirements and the laws around being insured as a rideshare driver in California.

A driver, looking to make a couple of extra bucks or simply to keep busy, signs up with Uber online. They have to supply information like their driver’s license, their insurance information, and more to the company. They also have to take their car or truck to an Uber inspection station to make sure that it’s in good enough condition to carry people.

All of the rideshare companies, like Uber, issue guidelines for their drivers. Uber, for example, issued the specifics on June 16, 2015. They include in their discussion the $1 million in commercial liability insurance provided to their “driver-partners.”

Any coverage that the company provides does not change a driver’s obligation to meet the state’s rules regarding auto insurance coverage.

Important: Personal auto coverage does not cover you for the time that you’re driving for a rideshare company.

The California Laws for Rideshare Drivers

On September of 2014, a California assembly bill was signed into law that took effect on July 1, 2015. The law was designed to tighten up the insurance rules for drivers who were using their cars for more than just themselves and people they know.

“Closing insurance gaps in ride-sharing coverage is essential to making sure passengers, other drivers and pedestrians are protected when ride-sharing vehicles are on the road,” said Insurance Commissioner Dave Jones. “This new law is a good start and requires TNCs to provide liability coverage or make sure drivers have liability coverage during all periods the TNC application is on.”

One interesting note about the law is that it only governs insurance that is needed by the Transportation Network Company (TNC) while the app is turned on. Technically, even if you are a Lyft driver, you don’t need to have the same level of insurance when you’re driving yourself to the store as you do when you’re taking rides through the app.

The law breaks up the times that you’re driving for a rideshare company into three periods:

  • Period One: While you’re waiting for a passenger and the app is active.
  • Period Two: When a passenger is accepted through the app but hasn’t yet been picked up.
  • Period Three: The moment the passenger enters the vehicle until the passenger exits the vehicle.

For period one, you must have the following car insurance coverage:

  • $50,000 minimum for injury to a single person
  • $100,000 minimum for injury to multiple persons
  • $30,000 minimum for property damage

**The rideshare company must also maintain $200,000 in excess insurance during the pre-match period. Lyft, Uber, or whichever company you’re working with will have this policy.

Note that this only applies to the period that you’re waiting, online, but don’t have a match.

During periods 2 and 3, when you’re driving to someone or have someone in your car, the TNC ’s commercial liability insurance ($1 million) kicks in. You still need comprehensive and collision up to the actual cash value.

It might seem odd to require additional insurance for a period where you aren’t working, but technically, you’re on their clock. You’re not an employee, but you’re working, even if you’re in your car listening to the radio. It’s no different from a town car driver who is sitting waiting for a fare at an airport. They might be actively driving the car, but their presence is there because they are waiting for someone.

While the Rideshare App is Off

During the time that you don’t have the app on, you can have any insurance you want, including the state minimum. You don’t need to have additional coverage.

Outside of Insurance

This is a bit outside of our purview of insurance, but if you are planning to start your own rideshare company you will most likely need a business license or to register your business some way. Contact the city you’ll be driving in to make sure you stay inside those laws.

Good luck. Make money. Have fun. Stay safe!

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