Rideshare Insurance: Do You Need It? 2024 Guide
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Discover the methodologyConsidering making extra money working for a ride-sharing company like Uber or Lyft? It's a fantastic way to be your boss, set your hours, and pick up some extra cash by working full-time or just a few part-time hours.
However, before you hit the road you must understand rideshare insurance and ensure that you have proper insurance coverage to protect you financially in an accident.
This article dives deep into the world of rideshare insurance in Canada, answering all your burning questions: What is it? How does it work? Are there any gaps in coverage?
Rideshare Insurance in Canada: 5 Key Takeaways
- Companies provide drivers rideshare insurance under a commercial auto insurance policy.
- Rideshare insurance coverage provided by the employer varies depending on the driving activity.
- Many private policies will not provide coverage if/when you use your vehicle for commercial purposes.
- Using a vehicle for commercial purposes normally means using it as a taxicab and carrying paying passengers.
- Always tell your insurance company of your intention to work for a ridesharing company.
What is rideshare insurance?
Rideshare insurance is a specific type of car insurance that protects motorists when they use their vehicles for ride-sharing services like Uber and Lyft. Rideshare insurance is a necessity as standard private car insurance will normally exclude damages that occur when a vehicle is being used for commercial purposes.
As can be seen in the extract from Economical Insurance’s car insurance terms below, commercial purposes refer to when a vehicle is used as a taxicab and carrying paying passengers.
“General Exclusions
[...] There is no coverage under this policy if:[...] the automobile is used as a taxicab, bus, a sightseeing conveyance or to carry paying passengers.”
Economical Insurance general exclusions 1.8.1
Fortunately, if you do decide to join the ridesharing fleet, rideshare companies are legally required to provide their drivers with rideshare insurance. They do this via a certain type of commercial auto insurance.
However, since rideshare insurance does come with certain limitations it is imperative that motorists who drive for app-taxi companies also consider extensive private rideshare insurance to fill the gaps in coverage that do occur.
You can take a look at the best options for rideshare insurance in Canada using our free tool below. Get personalized quotes and compare them easily with our tool.
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How does rideshare insurance coverage work?
As mentioned above, ride-hailing service providers do provide their drivers with mandatory coverage. However, the insurance is not all-encompassing, nor does it extend to cover the vehicle when used outside of work.
Furthermore, rideshare insurance coverage is staggered, meaning that the extent of the coverage itself changes depending on the level of activity of the driver. The following breakdown details how rideshare insurance coverage works.
Commercial rideshare insurance coverage
During personal use of the vehicle: When the ride-hailing app driver mode is turned off.
The rideshare company provides no coverage at this time and the individual must have private car insurance in place.
Stand-by mode: The ride-hailing app is on and the driver is awaiting a booking.
Commercial rideshare insurance applies with the following basic coverage:
- Basic third-party liability
- Statutory accident benefits
- Uninsured automobile cover
- Direct Compensation Property Damage (DCPD)
Some ride-hailing services such as Lyft will also extend coverage to include the following; however, since some may not it would be wise to double-check with your employer to understand your coverage.
- Contingent comprehensive, collision and upset protection*
Ride accepted: The driver has accepted a job with a passenger on board.
Extended coverage applies which normally includes:
- Third-party liability up to $2,000,000 per accident
- Statutory accident benefits
- Uninsured automobile cover up to $2,000,000 per accident
- Direct Compensation Property Damage (DCPD)
- Contingent comprehensive, collision and upset protection*
*Contingent Comprehensive, Collision and Upset
The coverage known as contingent comprehensive, collision and upset is only provided by the commercial rideshare insurance if the driver has this level of cover already included in their private car insurance policy. If they do not, no coverage protection will be extended to the driver's vehicle repairs or replacement if they are involved in an at-fault accident.
Should I have comprehensive coverage outside of rideshare insurance?
It is incredibly important that Uber and Lyft drivers get extra coverage outside of rideshare car insurance, specifically comprehensive and/or collision and upset protection since an increased amount of time driving, statistically leads to a higher risk of accidents.
Furthermore, and as evidenced, commercial rideshare insurance only provides the statutory car insurance required by law when the car is in motion and the app is on, while protection to the driver’s car will only be awarded in at-fault claims if the driver already has comprehensive insurance and collision and upset cover.
Therefore, if rideshare drivers only have statutory private car insurance when driving for Uber or Lyft, they will have to pay for repairs or replacement of their vehicle if in an at-fault claim. If uninsured, the side job that was meant to earn you some extra money may lead to not being able to earn any money at all.
Take a look at how you can get the best deals and save on car insurance using our free tool below. You can compare personalized quotes from the best car insurance companies in Canada.
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Can I buy private rideshare insurance?
Yes, drivers in Canada can buy private rideshare insurance. However, this coverage is not commonly advertised by insurance providers since ride-hailing companies do provide commercial auto insurance to their drivers. In fact, the only insurance provider in Canada that actively advertises rideshare insurance protection is Aviva Insurance, who provide it as an add-on to a normal auto insurance policy.
It should be noted that “private rideshare insurance” as a term is a bit of a misnomer since insurance providers don’t specifically offer rideshare insurance coverage. What rideshare insurance as an add-on does, is it removes the exclusion from the private car insurance policy that states that no coverage is afforded if the vehicle is used for commercial purposes, i.e. driving paying passengers.
Some insurance providers will charge an additional premium for this policy endorsement (change to terms and conditions) to reflect the increased risk of an accident. In contrast, some providers won’t charge anything at all.
Watch out!
Since car insurance policies do exclude coverage if the vehicle is used for commercial purposes, you have to tell your provider when you start driving for ride-hailing apps. If you do not, you could invalidate your private policy despite receiving auto commercial protection from Uber, Lyft, etc.
What companies provide rideshare insurance in Canada?
Ride-hailing companies are legally required to provide their drivers with statutory auto insurance when they are active. As such, the companies navigate, negotiate and purchase rideshare insurance from specific insurers that offer the best deal. The insurance itself seamlessly kicks in when the driver turns on the app, logging the time and date of the driver’s activity and whether they have a passenger or sitting idle.
It is the task of provincial insurance regulators to ensure that commercial car insurance policies meet statutory requirements and the minimum expected coverage to maintain safety on the streets of Canada.
For example, rideshare insurance in Ontario is regulated by the Financial Services Regulatory Authority (FSRA) in Ontario regulates rideshare insurance in the province and maintains a register of all companies with approved FSRA auto insurance.
The following table highlights rideshare companies with FSRA-approved rideshare insurance and names the companies that issue their policy.
| Rideshare companies with FSRA-approved auto insurance | Auto insurance policy issued by |
|---|---|
| Ella Transportation Technologies | Northbridge General Insurance Corporation |
| EZ Ride | Northbridge General Insurance Corporation |
| Lyft | Aviva Insurance Company of Canada |
| M-Rides | Northbridge General Insurance Corporation |
| NRT OnDemand | Hartford Fire Insurance Company of Canada |
| RideCo | Northbridge General Insurance Corporation |
| RideON | Northbridge General Insurance Corporation |
| Steer | Northbridge General Insurance Corporation |
| Uber | Economical Mutual Insurance Company |
| Uride | Northbridge General Insurance Corporation |
| Wilma | Northbridge General Insurance Corporation |
| Y-Drive | Northbridge General Insurance Corporation |
| ZoomZoom | Northbridge General Insurance Corporation |
How much does rideshare insurance cost?
Commercial rideshare insurance should not cost the driver anything as it is provided by ride-hailing companies. However, drivers might find that their car insurance premiums increase slightly when they inform their insurer that they are using their insured vehicle for commercial purposes. This slight increase in cost will reflect the higher usage and risk of the vehicle being in an incident.
The main cost of rideshare insurance is failing to have comprehensive protection in place and subsequently losing access to your vehicle if you’re involved in an at-fault collision. You can easily compare the best comprehensive car insurance policies using HelloSafe’s online comparison tool below.
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Who is eligible for rideshare insurance?
To be eligible for rideshare coverage you will need to meet the ride-hailing company’s conditions and requirements for employment. These include having:
- A valid Canadian licence of a specific class
- Adequate years of driving experience
- A specific capacity limit in the car
Furthermore, your private car insurance may also have specific terms when it comes to allowing you to use your vehicle for commercial purposes. These often include, but aren’t limited to:
- Not exceeding a maximum number of driving hours per week
- You specify the type of commercial purpose such as ride-hailing and not using the vehicle for other commercial purposes like deliveries
- Only the driver listed on the rideshare insurance policy can use the insured vehicle for commercial purposes
- Restrictions on the number of ride-hailing drivers in the household
