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

By Ben Tosi · Friday, August 7, 2020

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 insurers 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 insurers are rapidly expanding the depth of their policies to include ridesharing cover, so you might actually be covered. Either way, the first step when sorting out your car insurance after signing up as a partner-driver is to contact your car insurance 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 insurer will have your back for a range of incidents including fire, theft or a storm in addition to road accidents, and you’ll 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 however, is that the caps around coverage 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?

Like we’ve mentioned, there are a bunch of insurers that now cover their policyholders when driving for a ridesharer and that number is increasing each year. The following providers will offer you cover as a rideshare driver:

These providers have policies with rideshare as an Optional Extra:

Why you need to enquire about rideshare car insurance

We’re not a negative bunch here at Mozo, but it is pretty important to understand the kind of money you could cost yourself if you don’t either ask your insurer about ridesharing cover, or shop around for a policy that will have you covered in the event of an accident.

Essentially, if your insurer lists 'carrying passengers for money' as a general exclusion 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 have usually provided, whether it be for your own car or someone else’s property will not kick in, leaving you to foot the bill. For this reason, it is super important to call your provider up and ask about ridesharing cover before you get your newest side hustle up and rolling.

If you’re not covered, it could be time to shop around for a new policy using Mozo’s comprehensive car insurance comparison tool. At a quick glance, you’ll be able to compare a range of must-have features like which discounts are on offer, whether you have the flexibility to choose your repairer, level of excess as well as how long it will take you to get a quote, happy hunting!