More people in California drive for Uber or Lyft than almost anywhere else in the country. It's flexible, it's accessible, and, for a lot of people, it's become an important source of income.

But there's one thing many drivers don't know when they sign up (because the contract explanation is vague): the moment you log into the app, your personal auto insurance may not cover you. And what fills that gap isn't as straightforward as you'd think.

How rideshare insurance actually works

Uber and Lyft operate as Transportation Network Companies, or TNCs, which means they're regulated by the California Public Utilities Commission and required by law to carry insurance during all phases of a ride. 

The problem is that coverage isn't consistent across all three phases, and most drivers don't know that until they're filing a claim.

Here's how it breaks down:

• Phase 1: On Standby
  You've logged into the app, and you're waiting to be matched with a passenger or delivery.
  
  This is the vulnerable phase. The TNC provides minimal liability coverage here, and your personal auto policy has likely already stepped aside the moment you logged in, even if you're just sitting in your driveway.
  
  

• Phase 2: En Route
  You've accepted a ride or delivery, and you're on your way to pick up the passenger or order.
  
  The TNC's insurance applies here, but it comes with a high deductible—often $2,500 or more.
  
  

• Phase 3: On a Trip
  The passenger is in your car, or the delivery is in your vehicle.
  
  The TNC's full coverage applies. But that $2,500 deductible is still sitting there if something goes wrong.

(One thing worth knowing now: not every delivery company is classified as a TNC. I'll get into that below.)

What a rideshare endorsement does & and why I recommend it

There's a straightforward fix for TNC drivers, and it's called a rideshare endorsement. It's added directly to your existing personal auto policy and works alongside the TNC's coverage.

Here's what it does:

• In Phase 1, when the TNC's coverage is minimal, and your personal policy has stepped back, the endorsement helps some of the coverage gaps for liability, uninsured/underinsured motorists, and physical damage while you’re waiting to accept a ride or delivery.  
  
  

• In Phases 2 and 3, it helps cover that $2,500 deductible, so you're not stuck paying thousands of dollars out of pocket if you're in an accident.

I recommend this to every client who drives for a TNC. Here's my thinking: when you're using your vehicle to generate income, you need coverage that reflects that. It doesn't matter if you're driving 1 hour a week or 40 hours. The moment you log into that app, you're working. And at an average of $10 a month—about the cost of a couple of coffees at Better Buzz—it's one of the easiest business expenses you'll ever justify. Because that's what it is: a business expense (you may even be able to deduct it when you file your taxes, but double-check with your accountant on that one).

A couple of things to know before you look into it:

1. Most times, you can only add this endorsement if you already carry collision and comprehensive coverage on your personal auto policy.
   
   

2. Not every insurance carrier offers a rideshare endorsement. But if you're driving for Uber or Lyft, it's the first thing I'd tell you to get in place.

What this looks like in real life

A few years ago, one of my clients was driving for Uber when she was involved in an accident. A passenger was in her car, so she was in Phase 3—the phase where Uber's full coverage applies.

Her car was deemed a total loss. Uber's policy covered it, but their deductible was $2,500.

Fortunately, she had the rideshare endorsement included on her personal auto policy, therefore, the carrier covered $2,000 of that deductible. She only had to pay $500, which was the deductible on her personal policy.

Without the endorsement, she would have been responsible for the full $2,500.

That's a $2,000 difference. The math isn’t complicated.

What happens if you don't have this endorsement

When you file a claim, one of the first questions you'll be asked is whether the vehicle was being used for rideshare or delivery at the time of the accident. If you were logged into the app and you don't have a rideshare endorsement, your personal auto insurance will likely deny the claim entirely.

That means you'd be responsible for:

• Damage to your own vehicle

• Damage to other vehicles or property

• Medical expenses for injuries

• Legal defense costs if you're sued

It's not a matter of "maybe" or "it depends." If you're using your vehicle for business purposes without the right coverage in place, your personal policy won't step in to help.

A note for parents

If your child is driving for Uber or Lyft and is using your vehicle, this conversation is even more important.

A few years ago, my niece was delivering for Uber Eats. She was still living at home, and the vehicle was in my brother's and sister-in-law's name. The moment I found out, I called my brother and said, "You need to add the rideshare endorsement to your policy."

Here's why:

If a young driver causes a serious accident and the damages exceed the TNC's insurance coverage, the injured party may hire an attorney to seek additional recovery. A 19-year-old with no savings and no major assets isn't a viable target. But the person who owns the vehicle? That's a different story.

Attorneys go where the assets are. And if the car is in your name, you carry legal exposure for how it was being used, regardless of who was behind the wheel. Under California's permissive use laws, a vehicle owner can be named in a lawsuit for damages arising from the use of their car, even if they weren't driving. In a worst-case scenario, that means your home, your savings, and everything you've built could be in jeopardy.

In my personal opinion, that's not a risk worth taking, especially when a rideshare endorsement averages roughly $10 a month. And if you have significant assets, it's also worth having a conversation about an umbrella policy for an additional layer of protection.

What About DoorDash and Other Delivery Services?

Earlier, I mentioned that not every delivery company is classified as a TNC in the state of California. This is where that distinction matters.

DoorDash, Instacart, Grubhub, and similar platforms aren't regulated as Transportation Network Companies under California law. That means the rideshare endorsement I offer through my agency cannot be applied to your personal auto policy for that type of work. The coverage structure is different and, frankly, less clear-cut.

If you're driving for one of these companies, my recommendation is to contact them directly and ask what they cover and where the gaps are. You deserve to know what protection you have—and what you don't—before you're in a situation where you need it.

What I recommend

If you're driving for Uber or Lyft— either full-time, part-time, or just occasionally—and you haven't looked into the rideshare endorsement, it’s worth addressing sooner rather than later. It's a small addition to your existing policy that fills a real gap, and the math on it is hard to argue with.

Fill out the short form below, and I'll let you know whether your current policy qualifies and what it would take to get this coverage in place.