If You Drive For A Ridesharing Or Food Delivery App, Make These 3 Changes To Your Auto Insurance

Working as a driver for a ridesharing or food delivery app is becoming more common. The apps are convenient to use and you can set your own work hours. However, many drivers don't look into the insurance issue — driving for these apps is considered commercial use of your vehicle.

This isn't allowed by any personal auto insurance policy, simply because someone who drives for eight hours a day is more likely to get into an accident than someone who sits in an office eight hours a day. Thankfully, however, you don't necessarily need to purchase commercial auto insurance. Insurance companies are willing to work with drivers who freelance. However, you'll need to modify your insurance policy. Read on to learn three things you'll need to do.

1. Add Ridesharing Coverage to Fix the Gap in Your App's Insurance

Most apps will provide drivers with coverage, and the coverage limits are typically fairly good. However, there's a large problem with the way that these apps cover you if you're in an accident — there's a gap in their coverage.

These services divide your time spent working into three periods. Period 2 is when you're en route to your first destination (such as your passenger or a restaurant.) Period 3 is when you're en route to your final destination (such as your passenger's destination or your delivery customer.)

Your app's insurance is in full effect at this time, and they'll cover you if you are in an accident. Auto insurance companies don't mind you using your personal vehicle for commercial use as long as it's fully covered by commercial insurance — in this case, it's the app company.

Period 1 is when you're logged in to the app and waiting for your next request. This is where the problem lies. Coverage is limited during this time, and most apps will have you contact your own auto insurance carrier if you're in an accident. If someone rear-ends you while you're waiting on an order, you're in trouble — when you call your insurance company, they may find out you're freelancing as a driver under a personal auto insurance policy. If they do, they'll cancel your policy.

This gap is what ridesharing insurance is designed to protect you against. It provides coverage for Period 1 and prevents it from affecting your auto insurance policy. If you don't have it, you risk losing your insurance. Thankfully, adding this coverage to your policy is inexpensive.

2. If You Don't Have It, Purchase Collision Coverage

The other thing you should note about driving as a freelancer is that these apps only provide contingent collision coverage during Period 2 and Period 3. Collision coverage limits are high, but the apps won't pay out for them unless you're also carrying collision coverage on your own insurance policy.

If you drive full-time for a living, a lack of collision coverage puts you in a dangerous spot. An accident that totals your car puts you out of a job, and you'll also face a high repair bill that you may not be able to pay without coverage. If you're freelancing, make sure you've got collision coverage on your auto insurance policy.

3. Check Your Policy to Make Sure All Your Apps Are Covered

Auto insurance companies vary in how they write their ridesharing policies. Some won't cover on-demand food delivery services, while others will. If you're working with both delivery apps and ridesharing apps, make sure your auto insurance carrier covers both. If they don't, you'll need to either quit working for delivery services or switch to a carrier who covers everything.

Many people who work as drivers for these apps don't bother to upgrade their insurance coverage and assume that their auto insurance company will never find out they're driving for commercial purposes. Unfortunately, this can easily lead to your insurer denying your claim, dropping your coverage, and suing you for fraud if you actively lie to them. The smart thing to do is to browse auto insurance quotes from multiple insurers offering broad coverage options for freelance drivers — you'll be able to protect your job and your coverage.

Contact an auto insurance company to learn more about your options.