Are You Sure You Want to Be an UberX Driver?

Driving for a company like UberX might seem like a great way to make cash, but gaps in your insurance coverage could leave you holding the bag.

Anyone who’s ever tried to hail a cab in the rain can appreciate the convenience of Transportation Network Companies (TNCs) like UberX, Lyft, and Sidecar. These companies are based on a similar model: ordinary drivers use their own cars to transport passengers, who use their smartphones to request a ride. (To clarify, UberX is a new ridesharing service launched by Uber in 2012. The company also offers a range of higher-priced Uber car services using professional drivers.)

Seems like a great way for regular folks to earn a little extra cash. And the ridesharing aspect means fewer cars on the road. So everyone wins, right?

Not exactly. Critics complain that TNCs take business away from cab drivers (as well as profits, since cabbies have to pay for commercial insurance). There’s also been controversy regarding Uber’s policy of raising prices at peak times. And, on January 27, Uber was named in a wrongful-death lawsuit involving a 6-year-old girl struck and killed by an UberX driver on New Year’s Eve in San Francisco. Though the driver wasn’t carrying a passenger, the lawsuit claims he was logged into the UberX app at the time and was distracted by checking his phone for a fare.

Then there’s the question of insurance. And it’s a big one.

TNC drivers could face coverage gaps

In September 2013, the California Public Utilities Commission (CPUC) established new rules, defining a TNC as “a company or organization operating in California that provides transportation services using an online-enabled platform to connect passengers with drivers using their personal, non-commercial vehicles.” It concluded that TNCs are “providing passenger transportation for hire,” which is a livery service.

Most standard auto policies don’t provide coverage for livery vehicles — if you use your vehicle for business purposes, you need commercial car insurance. But many TNC drivers are unaware of this.

Though TNCs are now required to carry $1 million in liability insurance, this coverage is designed to protect riders and pedestrians and pay for damages to other vehicles. The policy doesn’t have to cover the driver’s car or the driver’s injuries (and it doesn’t kick in at all unless the TNC driver is found at fault). And because of the livery exclusion, the driver’s standard personal insurance likely won’t cover accidents either. So, instead of adding to their income, the TNC driver could be left holding the bag.

There’s also disagreement about what constitutes “working” for a TNC. Uber claims no responsibility for the New Year’s Eve accident because the driver wasn’t carrying a fare. But, from an insurance standpoint, if a TNC driver is available through the app, they’re driving as a livery service and therefore won’t be covered.

Esurance and TNCs

Though we can’t speak for all insurance companies, the livery exclusion is pretty universal. According to our definitions of coverage, TNC drivers would need commercial insurance since a personal auto policy through Esurance doesn’t cover both personal and commercial use of a vehicle. In all states except California, we’re unable to offer a standard policy to TNC drivers. And in California, the driver’s standard coverage doesn’t apply during a rideshare trip.

If you’re driving for a TNC, the California Department of Insurance urges you to contact your insurance company and see if there are gaps in your coverage that are putting you at risk. You might be better off with a commercial policy. (Esurance doesn’t offer commercial auto insurance, but you can get it through our partner.) Since Lyft is already available in 20 cities (and UberX in dozens), this is good advice no matter where you live.

Keep in mind that carpools or commuter rideshare programs (where drivers give unfamiliar passengers rides to work in order to take advantage of carpool lanes) aren’t subject to the livery exclusion. The CPUC has determined that traditional carpools don’t qualify as TNCs. If you aren’t making a profit from carpooling, it’s not considered a business, even if your passengers contribute to the cost of gas and tolls.

What’s next for UberX and other TNCs?

Services like UberX are a new and unique creation, and deciding how to regulate them has posed some challenges. California was the first state to coin the term “Transportation Network Companies” and institute a formal set of rules for TNCs. These new regulations may set a precedent for other states and municipalities going forward, and in fact, a bill that would classify these companies as TNCs is currently moving through the Colorado Senate. But the controversy involved with the wrongful-death lawsuit shows that the issue of liability is far from resolved.

Some TNCs have addressed the liability gaps by working with insurance carriers and voluntarily adjusting their coverage. Lyft, for example, recently announced additional coverage for their drivers in 3 categories: collision, uninsured motorist, and underinsured motorist.

Look for more posts on this topic as the situation evolves.

UPDATE: Since this post was written, Uber and Lyft have announced extended liability coverage for their drivers. Sidecar proclaimed its intent to increase the coverage for their drivers as well. However, insurance regulators throughout the country have expressed concerns that serious coverage gaps still exit. The California Public Utilities Commission is expected to weigh in soon — we’ll keep you posted.

Related links

What’s the difference between collision and comprehensive coverage?

20 Responses to “Are You Sure You Want to Be an UberX Driver?”

  1. Avatar for Ellen Hall
    April 29, 2014 #

    Uber now provides coverage for UberX rides. Please see:

    • Avatar for Ellen Hall
      February 10, 2015 #

      What about between Rides. Look at T's Post below. Prime example of how you are going to lose it all if you have an accident with out getting the proper coverage will destroy you life. Uber is the new Pimp of people looking for a job. Using them like children in a factory where they and their family's lives are about to be destroyed in one auto claim that is not covered. But At least Uber is making money.

    • Avatar for Ellen Hall
      Tanya Z.
      June 7, 2016 #

      That sounds nice, huh? What they don't tell you is that you cannot double-dip insurances with James River Insurance (Uber's) and your personal insurance. What they don't tell you is that there is no rental reimbursement, and their uninsured motorist coverage only applies to bodily injury, and that there is a $1000 deductible for body shop repairs. So, say your get rear-ended by an uninsured motorist while on the app and Uber's insurance kicks in, and all they're paying for is the damages but your personal coverage includes rental, so you think you can use that… They can't help you. You need to have a personal commercial insurance policy. You'll be left paying for the rental car/ ride share expenses out of pocket while your car is in the shop, and on top of that the $1000 deductible to the auto repair shop out of pocket. They make it out as if they have your best interest in mind, but YOU ARE NOT THE CLIENT, UBER IS THE CLIENT.

  2. Avatar for Ellen Hall
    October 6, 2014 #

    I was in an accident driving for Uber given the false sence that I was covered under a policy provided by Uber while logged in as a driver. I was between rides and an uninsured motorist hit me causing over $7000 in damages to my car. I am now out of a job, and a car since my own insurance will not cover the accident and Uber's insurance will not cover me since I was in between rides. This has turned my life upside down. I am a single mother without a penny to my name. I've lost my home and am left paying a car note on a car I can not afford to fix. Make sure you do your homework before driving for any of these companies. Make sure your personal insurance is set up to cover you in the event there is a loop hole in the ride sharing company's insurance that won't cover you. Uber has not shown me an ounce of compassion for my circumstances. They do not respond to my calls or emails. Guess when your not putting money in their pockets, your no longer important to them. There still feeding their families. What about mine?

    • Avatar for Ellen Hall
      February 10, 2015 #

      Good case to go after UBER for lying to you. Class action?

  3. Avatar for Ellen Hall
    maxrebos (@maxrebos)
    October 23, 2014 #

    I looked into being an uber drive in my own car. I checked with my personal auto insurance company and they said I would NOT be covered if I was involved in an accident while not on the Uber "clock". In between rides or even when not doing uber at all that day. I checked with 3 other companys, all said NO. Uber coverage is ONLY while you have a body in the car. I spoke to Hanover, Commerce, Geiko, and one other I forget the name. None will cover it and in fact will drop my policy if i was found out I was doing uber on the side. The expense of a commercial license and plate costs over twice what my car is worth. Uber sounds like a great way to make money, but when your car gets wrecked, all that money will go to your repairs or worse.

  4. Avatar for Ellen Hall
    November 5, 2014 #

    A commercial auto policy does not cover rides for hire. It covers packages, etc., but not people. To be covered one must purchase livery insurance which is VERY expensive and even then the driver might have to have a commercial driver's license, not the regular one.
    I really want to drive for Uber, Lyft and Sidecar but until this is worked out with the insurance industry and possibly in the courts, I'll wait. I don't want to be sued by anyone.

  5. Avatar for Ellen Hall
    November 22, 2014 #

    can somebody recommend a solution for a potential uber driver in california?

    i am thinking about driving for them as a part-time gig, but would like to be truly covered. i see there is a link in the article to commercial insurance. i will call on monday. just curious if others have any legitimate options for california drivers.


    safe driving to all.


    • Avatar for Ellen Hall
      December 29, 2014 #

      Uber Black required commercial insurance as well as commercial license plate, operating permit and ton of paperwork and additional permits which cost me total about $500. Uber X requires you have regular insurance but not while you are logged in. Uber provides gap coverage for that. Remember, not having a passenger is not the same thing as not being logged in. If you are logged in but do not have a passenger and get into accident, Uber will cover it. But if you log out and get into accident, it is your responsibility. Do not blame Uber. They are not obligated to help anyone who has logged out and got into an accident a second after.

    • Avatar for Ellen Hall
      December 29, 2014 #

      Oh, one BIG tip – from experience, when insurance companies hear Uber, they dont want to do business w people. Insurance companies need to realize they provide coverage when people are logged off Uber app.

      • Avatar for Ellen Hall
        July 8, 2015 #

        Milina, you are incorrect. Unless you have a commercial insurance policy, your auto insurance specifically excludes vehicles used for livery purposes. This means that even if you are not on the job when there is an accident, the claim would still not be covered, because you are using the vehicle for a purpose which is excluded in your auto insurance.

        Also, your tip seems to suggest that you are telling people not to tell their insurance companies about their Uber driving. This would however constitute hard insurance fraud, and is a felony. I would strongly urge anybody thinking about taking this advice to consider the harm they could be causing themselves by trying to lie to their insurance companies, especially since insurance companies process thousands of claims a day and have a lot of experience dealing with and prosecuting fraud.

  6. Avatar for Ellen Hall
    December 29, 2014 #

    Ok. People here are very confused. First off, you do not work or drive FOR Uber. Uber is a tech company who made an app. They are not your employer. You work for yourself. From the point you log in until you log out – NOT when you do not have a passenger in your car bt when you actually log out – is when you ARE covered by Uber insurance because your regular car insurance company will not provide insurance while you use vehicle to make money. Before you log in and after you log out is NOT anyones responsibility but yours as far as what you do when you get into an accident.

    • Avatar for Ellen Hall
      Matt Cotton
      May 29, 2015 #

      It sounds like you're saying as long as you are logged in, you're covered.
      What I'd like to know is 2 things: if you are involved in an accident while logged in, with or without passengers, do you notify your personal insurance, first? And, if you don't have a pax, how would they even know you're an Uber driver unless you tell them?

  7. Avatar for Ellen Hall
    December 29, 2014 #

    Also, commercial insurance is super expensive and required ONLY if you do Uber Black. There is a big difference between Uber X and Uber Black…

    • Avatar for Ellen Hall
      January 19, 2015 #

      Milina's information is inaccurate. The Uber app will log the driver out for any number of reasons – too many cancellations, several minutes of inactivity, etc. Just go to and search for "Uber logs me out" or "app logs me out". This probably minimizes Uber's liability.

      • Avatar for Ellen Hall
        Matt Cotton
        May 29, 2015 #

        That IS annoying as heck! I spend about half of my logged in time travelling to the areas where the rides are, hoping for a miracle ride request along the way. North Jersey is a hard place to drive! I leave the Uber app open, on top, and listen to the voice guidance from Google maps in the background. If it's open on top, or you flip to it every couple of minutes, it stays logged in. I could write a book!

  8. Avatar for Ellen Hall
    Matt Cotton
    May 29, 2015 #

    So, it sounds like no one has given this ANY thought at all and it's just easier for insurance companies to just dump you than deal with the hassle. And they wonder why EVERYONE hates insurance companies!

    • Avatar for Ellen Hall
      July 8, 2015 #

      Matt, it's not the insurance companies' responsibility to change considering Uber is the new company to this ball game. Uber's founders should have realized that their business model is not sustainable given that livery insurance costs more than what the drivers can afford or are willing to pay.

      You want to blame somebody for not giving the situation ANY thought? Blame Uber for creating such a flawed business. Any cab company would have had enough foresight to consider that they need to include insurance in their list of expenses.

      Also, insurance companies don't owe you anything. They are the ones who take on the risk, so it is their right to choose what risks they will accept. If you don't like it, you always have the right to self-insure (with the exception of liability coverage on autos).

  9. Avatar for Ellen Hall
    April 17, 2016 #

    I am just learning how to drive with, how long do i need to have a license before i could be a Uber driver?

    • Avatar for Ellen Hall
      Rachael Heller
      April 18, 2016 #

      Hello Anne,

      Unfortunately, we are not affiliated with Uber. We would suggest reaching out to them directly.

      Thanks for reading.

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