# Good Article About Lyft's High Deductble



## DC_Uber_Lyft_Driver (Sep 2, 2014)

http://therideshareguy.com/could-ly...ign=Feed:+TheRideshareGuy+(The+Rideshare+Guy)

*Could Lyft Drivers Be On The Hook For A $2,500 Deductible?*
my mega-podcast a couple months ago but it seems like this topic is once again on the minds of many drivers out there (If you haven't listened to that one yet, I definitely recommend that you do so since almost all of what I talked about still applies). The one thing that has changed since then though is that Lyft and Uber now offer primary insurance during a trip - sort of.

Related Podcast: Uber and Lyft's Insurance Policy Explained

The reason why I say sort of is because their liability insurance is primary but their collision coverage is still in excess. So that means if you get into an accident, you will be covered by Lyft/Uber for liability up to 1 million dollars but you have to make a claim with your personal insurance before Lyft and Uber's collision coverage will kick in. Most, if not all insurance carriers will deny your claim if you were engaged in rideshare activities and then Lyft and Uber's collision insurance would kick in.

The problem with this scenario though is that at this point, in addition to denying your claim, some insurers will also drop you from their policy because they don't want to insure rideshare drivers. Insurance companies are all about reducing risk, so even though a rideshare driver doesn't technically pose more risk (carriers can deny the claim and Uber/Lyft will cover everything) to them, since they don't quite understand the risk yet, they'd rather drop you and not worry about it. There are insurance companies that will cover you (State Farm, Liberty Mutual, to name a couple) but a majority still don't want to take the 'risk'.

*Primary Insurance Doesn't Do Much If It Isn't Primary*
Lyft and Uber love to throw around the fact that their insurance is now primary but don't let that fool you. How many accidents have you ever been in where there was no damage to your car? If there's no damage, then you usually don't make a claim. It's hard to make a liability claim when you get a love-tap at 2-3 mph, even our crazy law system knows that if there's no damage to the vehicle, it's very unlikely that there was an injury.

So while Uber and Lyft do now offer primary insurance, absolutely nothing has really changed since before. If you get into an accident and want your car to be covered for collision, you will have to make a claim with your personal insurance company first. I know that if this happened to me, then I would lose my insurance and have to find a new carrier. So for now, that's the risk that you have to accept. If you want to be a rideshare driver, you run the risk of being dropped from your policy in the event of an accident. Not a huge hassle, but definitely an inconvenience if you ask me.

*What About The $2,500?*
In my mind, the real thing that you need to be worried about as a Lyft driver is the $2,500 collision deductible. Most people are aware of what a deductible is but I think a lot of people aren't aware of just how high Lyft's deductible is. It's $2,500!

So what that means is that if you get into an accident during a trip, Lyft will cover any liability claims up to $1 million (great, that's good coverage!) but then you'll have to make a collision claim with your personal insurance. Most will deny it since you were engaged in livery (hopefully they don't drop you too) and that's when Lyft's collision coverage will step in.

That all sounds great right? BUT Lyft's collision coverage comes with a $2,500 deductible which means that you are solely responsible for any damage up to $2,500. Lyft won't pay out a single cent to fix your car unless the damage is more than $2,500.

Now I've gotten into an accident before and I can tell you that $2,500 is no fender bender, it's quite a bit of damage. Obviously it depends which auto body shop you go to, but at a respectable shop, $2,500 will repair a lot.

*What If You're Not At Fault?*
Ok let's say you get hit by someone else and they are at fault. You shouldn't be responsible for anything right? In this scenario, that is how it should play out but as anyone who's been involved in an accident can tell you that's not always how things go. If you're not at fault, you have the option to go through your insurance carrier (in this case it would be Lyft's insurer: James River) or the other driver's insurance carrier. If you opt for the latter, you have to hope that the insurance company will accept responsibility and pay out in a timely manner. Normally, the big carriers like Geico, State Farm and MetLife will do so but there are a lot of carriers and situations where this may not be the case.

If you end up having to go through Lyft's insurance they will require you to pay the $2,500 deductible up front before you get any monetary help from them. Technically, James River is supposed to then go after the $2,500 from the other driver's insurance company but this doesn't always work out. So you could potentially be on the hook for $2,500 even if you weren't at fault. That would suck big time.

*What Should The Deductible Be?*
I know for a fact that a lot of Lyft drivers have no idea about this deductible but as dedicated followers of this site, I feel it is my duty to enlighten you. I don't think the $2,500 deductible means that you should stop driving for Lyft altogether but it is something you need to be aware of. Would you have the money to cover your deductible if you got into an accident today?

Even if you end up getting reimbursed for the deductible you may have to be able to float the $2,500 until the claim is paid out. And remember as soon as you get into an accident, your driver account will be temporarily suspended until you can prove that your car has been repaired. So you won't be able to drive extra hours to pay for that deductible.

Just in case you were wondering, Uber's insurance works the exact same way but they have a $1,000 deductible which I think is much more reasonable. You don't want a zero deductible because insurance is meant to insure against the things that you can not afford yourself. The premiums that you indirectly pay (Uber/Lyft pay these) have to cover all the benefits that an insurance company pays out, all of the expenses of running the company (including salaries, rent on buildings, etc) and any profit there might/will be. So by the laws of math, the average client will get less than what they put into it: that's how insurance works. So it behooves you as a consumer to avoid any type of insurance unless you really need it.

*What Should You Do?*
My advice is actually pretty simple: quit driving for Lyft and drive for Uber or make sure that you have an emergency fund of at least $2,500. I know there are a lot of people who will probably ignore this advice but being out on the road more increases your chances of getting into an accident since you can't control what other people do. No matter how good of a driver you think you are, your odds of getting into an accident go up the more you're out there.

Related Article: Uber is Still Offering Lyft Drivers $500 To Sign Up

$2,500 is a lot of money and most rideshare drivers probably don't have that lying around. So if you still choose to drive for Lyft, just make sure that you're ok with the associated risk of having to come up with that deductible IF you get into an accident. If you can make the same amount or more with Uber, it might be a good idea to drive primarily for Uber until Lyft lowers their deductible.

At the end of the day, Lyft isn't going to do a damn thing unless enough drivers complain about it. I think a $2,500 deductible is pretty much a slap in the face to hard-working drivers everywhere so my hope is that every single driver who reads this article will stop what they're doing, send an e-mail to Lyft and/or make a post in their local Lyft Facebook lounge and get some answers.

It's easy to dismiss this but once you get into an accident it will be too late. Now that you're aware of the situation, take action now and stand up for you and your fellow drivers!

_Were you aware of Lyft's $2,500 collision deductible before reading this article? Would you be able to come up with that kind of money if you got into an accident and is it enough to make you stop driving for Lyft altogether? What has been Lyft's response when you brought this up with them?_

- See more at: http://therideshareguy.com/could-ly...eGuy+(The+Rideshare+Guy)#sthash.rnJO1v04.dpuf


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## chi1cabby (May 28, 2014)

DC_Uber_Lyft_Driver said:


> There are insurance companies that will cover you (State Farm, Liberty Mutual, to name a couple) but a majority still don't want to take the 'risk'.


*Why major insurers won't cover Uber, Lyft drivers*

*http://m.sfexaminer.com/sanfrancisc...t-cover-uber-lyft-drivers/Content?oid=2909369*

*From the article:*

*Major auto insurers like State Farm, Geico and Progressive have made clear that personal policies exclude coverage for rides when a driver is paid.*

@The Rideshare Guy


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## DC_Uber_Lyft_Driver (Sep 2, 2014)

chi1cabby said:


> *Why major insurers won't cover Uber, Lyft drivers*
> 
> *http://m.sfexaminer.com/sanfrancisc...t-cover-uber-lyft-drivers/Content?oid=2909369*
> 
> ...


While I have no doubt that we'll be seeing specialized insurance packages being developed as the rideshare industry grows, I do like this idea from the article: "*Alternatively, ride-sharing drivers could form their own mutual insurance company, the way taxi drivers did when they formed the Public Service Mutual Casualty Insurance Corp. in 1925*."


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## chi1cabby (May 28, 2014)

DC_Uber_Lyft_Driver said:


> While I have no doubt that we'll be seeing specialized insurance


This would have already happened if Uber and Lyft had in fact wanted this to happen.
In Feb, there was much talk about the formation of Rideshare Insurance Coalition.
http://www.govtech.com/state/Califo...Coalition-for-Ride-Sharing-Uber-Joins-In.html
But after the first meeting of the coalition, Uber did not further participate in it.

Then in May, Lyft teamed up with MetLife to develop Rideshare Insurance policies. And nothing has come out of that partnership as of yet.
http://venturebeat.com/2014/05/06/amid-ridesharing-panic-lyfts-next-pick-up-metlife-insurance/

The fact of the matter is that providing 'App On' Primary Commercial Insurance is expensive. It's much cheaper for Uber and Lyft to keep on buying their policies from
a Surplus Line, Non Admitted provider like James River Insurance, as it is not accountable to any State's Insurance Regulator.


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## DC_Uber_Lyft_Driver (Sep 2, 2014)

I just think that as Uber and Lyft are made expressly legal in more and more places that we'll see the market take over and insurance companies independent of Uber and Lyft begin to compete for the rideshare driver moolah. Reasonable rates down the road aren't out of the question.


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## chi1cabby (May 28, 2014)

DC_Uber_Lyft_Driver said:


> Uber and Lyft are made expressly legal in more and more places that we'll see the market take over and insurance companies independent of Uber and Lyft


Cooperation of Uber And Lyft with the Insurance companies is essential to Rideshare policies being brought to the market. I think a good portion of Drivers drive for both platforms, and the Insurance companies need the raw data from both the companies to do actuarial analysis and accurately price any new insurance product. 
How many drivers, how many idle miles, how many paid miles, how many rides, how many hours driven, number of accidents, number of claims, value of claims paid...
That's why Uber and Lyft would have to jointly want these new insurance products brought to market. 
But Travis Kalanick and John Zimmer not only don't see eye to eye, but in fact loathe one another.


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## The Rideshare Guy (Jun 3, 2014)

chi1cabby said:


> *Why major insurers won't cover Uber, Lyft drivers*
> 
> *http://m.sfexaminer.com/sanfrancisc...t-cover-uber-lyft-drivers/Content?oid=2909369*
> 
> ...


Every single state is different which makes things even more confusing. The companies I listed do cover drivers but it depends on the state and there are 50 states ugh haha.


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## Heni Kaufusi (Oct 7, 2014)

Good post


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