What kind of auto insurance do you need if you drive for Uber or Lyft?

What kind of auto insurance do you need if you drive for Uber or Lyft?

While Lyft and Uber provide commercial insurance that covers you while you’re providing the service, you’re still required to have your own insurance when using your vehicle for personal reasons.

This article has been updated from a previous version.

Finn* started driving for Uber in the Greater Toronto Area to make extra cash. “I found myself needing $150-$200 extra a month to stay out of the red,” they said. After thinking through different ideas to make more money, Finn decided to drive for Uber. But when they renewed their personal insurance, Finn was asked if they drove for a ridesharing program. They said no. 

“I have absolutely no idea what the repercussions are. Under no circumstances do I want my rates to go up because they already went up due to other circumstances.” 

But Finn’s auto insurance premium might not necessarily rise if they tell their insurance company they drive for Uber. And they’ll be protecting themselves by doing so, too. We’ll explain why in more detail below.

Uber and Lyft position themselves as an easy way to make extra money with an asset you already own but don’t use 100% of the time: your car. Getting set up as a rideshare driver takes time but is straightforward — Uber has a six-step process, and Lyft has a process that takes 30 minutes.

The companies provide coverage when you’re on the clock. Uber provides $2 million of liability coverage and the same amount for uninsured/underinsured motorist coverage. It also has contingent collision and comprehensive coverage for drivers, but only if the car is insured for collision and comprehensive coverage on the driver’s personal auto policy.

Finally, in Ontario, Uber has commercial auto insurance for its drivers when they’re on the clock, but haven’t accepted a trip. Lyft offers similar coverage for its drivers. 

Regardless, you’ll need additional insurance on top of what you’re getting from Lyft or Uber.

What insurance do you need as a rideshare driver? 

While Lyft and Uber provide you with commercial insurance that offers coverage while providing a rideshare service, you’re still required to have your own car insurance when using your vehicle for personal reasons. All Canadian drivers must have third-party liability coverage by law.

As we’ve discussed before, your premium depends on various factors, including age, your home address, the type of car you drive and your driving record.

“When you add ridesharing into the mix, you should tell your personal auto insurance provider because now your personal vehicle is being used for commercial reasons part of the time,” says Pete Karageorgos, director, consumer and industry relations (Ontario) at the Insurance Bureau of Canada. That could invalidate your personal insurance even if you’re getting commercial coverage from Lyft or Uber. 

It’s essential to inform your insurance company that you’re using your car for commercial purposes. 

“Part of the reason is that you need to know who is on the hook if an accident happens,” Karageorgos says. Personal insurance won’t cover you if you get into a collision while working and vice versa. 

Does driving for Lyft or Uber raise your car insurance rate? 

All you wanted was to make some extra cash on the side, and we’ve stressed you out about your premium. However, there is good news. Just because you drive for a ridesharing company doesn’t mean your personal premium will go up. It depends on where you get your insurance. Karageorgos says that certain private insurers offer coverage for people who drive for Uber or Lyft. 

Aviva Insurance, Intact Insurance and belairdirect offer insurance for rideshare drivers using their personal vehicles for services. There are some limitations to these policies, however, so read the fine print before signing up. 

Aviva’s policy allows for 20 hours maximum a week driving for Uber. You also need to have: 

  • A G2 driver’s licence or higher
  • Six years of driving experience
  • You can only carry up to eight people, including yourself as the driver
  • You can’t use your car for food delivery
  • You can’t be registered as a taxi or limousine

Intact doesn’t charge an additional cost to drive for Uber. As with Aviva, you can’t work for Uber Eats or any other Uber service. Belairdirect also doesn’t charge extra for driving for a rideshare company. However, this coverage is only offered in Ontario. 

So, should you tell your insurance company you’re driving for a rideshare company? Yes, for several reasons. The company may offer a policy that provides coverage at no extra cost, but should anything happen, you’ll be covered whether you’re on or off the clock. A premium increase, if it should happen, would be cheaper than what you’d pay out of pocket for a collision. 

*Names have been changed for privacy.

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About the author

Renee Sylvestre-Williams

Renee Sylvestre-Williams is a finance and business reporter. In her more than 10 years of journalism, her work has been published in the Globe and Mail, Flare, Canadian Living, Canadian Business, the Toronto Star and Forbes. She also publishes a biweekly newsletter, The Budgette, where she provides financial education for single earners.

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