Ridesharing in Australia: How to drive for Uber without voiding your car insurance

Rideshare driver and passenger smiling

As a cheap alternative to pricey taxi fares, ridesharing services like Uber, Ola or Lyft have quickly risen to popularity among Aussie commuters.

But this particular segment of the sharing economy has also become one of the favourite ways for Aussie drivers to earn a little extra cash. With services making it a relatively simple and straightforward process to sign up, everyday motorists are now increasingly using their own car as a means to make money.

But where does that leave your car insurance policy?

Driving for monetary reward and your classic car insurance policy

Traditionally, car insurance policies (even at the comprehensive level) would not have covered you when driving for a ridesharing service. This is because most insurance companies list ‘carrying passengers for a monetary reward’ as an exclusion in their Product Disclosure Statements (PDS). This means while you’ll be covered for all the times you’re using your car in your personal life, the minute you turn the proverbial meter on, you’re not.

It is important to note that insurance providers are rapidly expanding the depth of their policies to include ridesharing cover.

The first step when sorting out your car insurance after signing up as a partner-driver is to contact your provider or check your PDS to make sure that you’re covered before getting behind the wheel of a car with paying customers.

The insurance your ridesharing service provides

One of the big myths floating around the ridesharing realm is that the service you’re driving for will cover you, your passengers and your car if something were to go awry while you were working. But this isn’t quite right.

While your new employers do provide a level of cover, it isn’t as extensive as you might think. For example, if you are at fault for an accident while driving for Uber, the company’s free contingency cover will only cover bodily injury to you, the driver, with up to a $400,000 lump-sum in the case accidental death or disability, plus other minimal lump sums, such as if you can't drive due to being assaulted on the job ($5,000) or incur broken or bones ($2,000). 

However, this doesn’t cover any of the damage you may cause to your own vehicle or others' during an accident. So it is important to have comprehensive or at least third party car insurance to help cover those potential costs.

Keep in mind, the cover discussed above comes with Uber’s insurance policy, but each ridesharing service’s agreement might differ slightly, so be sure to find out what type of cover they offer before you start driving.  

What level of insurance do I need to be able to drive for a rideshare service?

If you’ve recently signed up to a ridesharing service, you’ll probably be using your car more frequently than when it was just for private use, so you might want some extra peace of mind.

If this is the case, a comprehensive car insurance policy will go a long way. With this level of cover your provider will have your back for a range of incidents including fire, theft or a storm in addition to road accidents, and you could also enjoy the flexibility to choose your repairer or your level of excess.

In saying that, most of these ridesharing services will allow you to sign up and get driving with a lower level of insurance. For example, Uber and GoCatch will allow its driver-partners to register their vehicle so long as they have a third party property car insurance policy.

What this covers is any of the damage you might cause to another person’s car or property while behind the wheel, but not your own. The catch with many of these policies is that the coverage caps can be pretty minimal. For example, while you’ll may be covered for $5,000 worth of damage, the total costs might total upwards of $10,000, and you’ll be forced to pay the gap.

Who offers rideshare car insurance?

There are a bunch of companies now covering their policyholders when driving for a rideshare and that number is increasing each year. The following providers will offer you cover as a rideshare driver as standard:

There is also a huge list  of providers which have policies with rideshare as an optional extra. You'll just need to hunt through your PDS to figure out the details and what this might cost you.

Why you need to enquire about rideshare car insurance

It's pretty important to understand the kind of money you could lose if you don’t ask your provder about ridesharing cover, or shop around for a policy which includes it.

If 'carrying passengers for money' listed as a general exclusion on your policy and you’ve had an accident while driving for one of these services, your car insurance will be void.  This means any of the cover your policy would usually provide, whether it be for your own car or someone else’s property, will not kick in, leaving you to foot the bill.

If you’re not covered, it could be time to shop around for a new policy using Mozo’s comprehensive car insurance comparison tool.