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Understanding Rideshare Insurance Periods

As you may or may not know, rideshare drivers are required to carry different types of insurance coverages than those who simply drive for personal use. Texas state law requires rideshare drivers to carry higher insurance coverages since they are considered commercial drivers.

Additionally, Texas specifies that drivers who work for transportation network companies (TNCs) must carry special coverages that typically end up costing the driver 15%-30% higher auto insurance rates.

Auto Insurance Requirements for Texas Rideshare Drivers

As a TNC driver, including for Uber and Lyft, you must carry auto insurance coverage that provides protection beyond the minimum coverages in Texas while working for the rideshare business. The precise coverages required vary according to the “period” of rideshare driving you are in.

Period 0

The rideshare app is turned off and you are driving for personal use only. In this case, you just need protection that meets the minimum requirements in Texas, including:

  • $30,000 of bodily injury liability coverage per person injured in a crash
  • $60,000 of bodily injury liability coverage per crash
  • $25,000 of liability coverage for property damage per crash

Period 1

You are actively using the rideshare app, but you are waiting for a user to request a ride. In this case, you must have the following increased levels of liability protection:

  • $50,000 of bodily injury liability coverage per person injured in a crash
  • $100,000 of bodily injury liability coverage per crash
  • $25,000 of liability coverage for property damage per crash

You may be required to buy this coverage yourself, or the rideshare company you work with may provide it for you. Make sure you are covered by checking with your TNC.

Uber and Lyft provide “contingent” driver protections during Period 1. This means that you must buy your own coverage, but if your insurance provider rejects your claim, your TNC’s insurance policy will provide the necessary coverage.

Keep in mind that certain insurance companies won’t allow you to buy variable levels of insurance coverage going into effect at different times. That means you must purchase a plan that meets the higher limits at all times.

Periods 2 and 3

Period 2 occurs when you are on your way to pick up a passenger. Period 3 occurs when you have a passenger in your vehicle.

During these periods, the required liability limits increase substantially. You must carry a total of $1 million for bodily injury and property damage per crash. Luckily, this coverage is almost always provided by the TNC you work with.

Uber and Lyft will also provide you with $1 million uninsured/underinsured motorist coverage per crash. Uber takes it a step further, by providing contingent collision and comprehensive coverage that are in effect while you carry passengers.

Paying for Damages in a Texas Rideshare Accident

On the flip side, if you are not a rideshare driver but are involved in an accident with one, you must first file a claim with the driver’s personal insurance carrier. The insurance coverage provided by the driver’s TNC will only kick in if the driver’s personal policy denies your claim.

It’s important to make clear that rideshare drivers are not employees. Rather, these drivers are independent contractors. The distinction is important because liability for employees and independent contractors is very different.

However, most insurance companies will deny claims when their policyholder was driving for commercial use. Most policies specify that drivers may only use their vehicles for personal reasons, and ride-sharing isn’t a personal reason. That means many claims involving rideshare drivers can automatically be denied. That’s when the TNC’s insurance kicks in, which provides much higher coverages.

If you’ve been injured in a car accident with a rideshare driver through no fault of your own, you may be owed compensation. Our team wants to see that you are paid what you deserve.

Contact our firm today at (210) 934-6609. Speak with a member of our team and learn about your rights to move forward!

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