There are hundreds of thousands of Uber and Lyft drivers in the U.S. (amongst other drivers working for smaller rideshare companies), and the demand for their services continues to grow each year. Have you ever thought of becoming a Lyft or Uber rideshare driver?
Whether you’ve used Uber or Lyft for a ride before and now you want to try it from the driver’s side or you’ve been looking for a relatively easy way to make a side income, there are several things you should consider before signing up to work for a rideshare company.
Becoming a Lyft or Uber Rideshare Driver
Are You Eligible to Drive for Uber or Lyft?
Not everyone with a car can sign up to drive for Uber or Lyft. Rideshare drivers harming their passengers is a relatively rare occurrence but nevertheless something that happens enough times to warrant a few restrictions on who can sign up to be a driver.
Uber’s driver requirements are similar to Lyft’s driver requirements in that you must be 21 years old to drive (Lyft requires its drivers to have had active licenses for at least one year) and you must pass a basic background check (Lyft also checks your DMV record for driving-related incidents).
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Vehicle requirements for Uber are pretty simple: your registration must be kept up-to-date and your vehicle must be 2000 or newer (2005 or newer for select cities). You should also keep your vehicle clean and well-maintained for your passengers.
Vehicle requirements for Lyft include: the car must be 2004 or newer (2006/2007 or newer in some major cities), it must have four functional doors, all seat belts must be functional, the tires must have enough tread, the A/C and heat must work, and more.
The Auto Insurance Dilemma
Working for a rideshare company with only personal auto insurance is generally a huge no-no. If your insurance company finds out before you disclose your new gig as a Lyft or Uber driver, they could cancel your insurance policy.
Luckily for Uber drivers, you have access to the company’s commercial insurance policy while you have passengers in your car. When you’re offline, Uber doesn’t cover you at all. But once you turn on your Uber app to start finding passengers, total liability coverage of $100,000 per incident ($50,000 for injury and $25,000 for property damage as well) kicks in.
\Once you accept a passenger’s request for a ride and drive to pick them up, insurance coverage of up to $1 million for liability, $1 million for uninsured/underinsured motorists, and collision and comprehensive auto insurance (with a $1,000 deductible) cover you as a registered Uber driver. This insurance covers you for the duration of the ride until you drop off your passengers (at which point the $100,000 total liability coverage replaces the $1 million coverage until your next passenger).
Lyft has similar auto insurance coverage for their drivers, except they require that your personal policy have collision and comprehensive coverage in order to qualify for Lyft’s contingent collision and contingent comprehensive coverage (which comes with a $2,500 deductible and a maximum of $50,000 of physical damage to your vehicle covered).
Despite the coverage offered by both Uber and Lyft, there are oftentimes gaps in insurance that could cause problems for you. Since the Uber and Lyft insurance policies are covered by the portion of your driving fees they take out of your pay no matter what, it’s highly recommended that you seek out additional coverage from your personal auto insurance company, even if it comes with a bump in your policy rates.
Paying more money is preferable to losing your coverage altogether, which could happen if you’re not upfront and honest about your rideshare driving gig. So, protect yourself and your car from any unforeseen liabilities with more insurance.
To see what options you have available in your state, The Rideshare Guy has an incredibly comprehensive list of auto insurance options for Lyft and Uber rideshare drivers.
Independent Contractor or Employee?
The “gig economy” has transformed countless traditional employee jobs into less connected, independent contracting jobs. And, Uber is no stranger to the problems that arise in this conflict.
Just this year, Uber settled a massive lawsuit in California (and another in Massachusetts) in which the plaintiffs (Uber drivers) demanded to be classified as employees (and subsequently receive benefits such as health insurance and access to unemployment) while Uber argued for them to remain as independent contractors.
As of now, Uber must pay $84 million to 380,000+ of their drivers. But, Uber rideshare drivers still remain independent contractors despite previous lawsuit claims that the company is “involved in every aspect of the operation.”
Despite the recent lawsuit Lyft settled in California (different from the Uber settlement), Lyft drivers are still independent contractors as well. As an independent contractor, you would be responsible for both the employer’s and the employee’s portion of Social Security and Medicare taxes.
And, you wouldn’t have access to benefits such as company-provided health insurance and the ability to file for unemployment if your income stream dwindles. On the other hand, expenses incurred by your rideshare-driving gig – gas, car maintenance, water bottles for passengers, etc. – are tax-deductible.
How Much Can Your Earn, Anyway?
A major argument Uber and Lyft brought up during the recent legal proceedings was that their drivers have the ultimate flexibility to choose their own hours and work as much or as little as they want to unlike regular employees.
This is true for Lyft and Uber rideshare drivers and other rideshare drivers too. Whether you want to work weekend nights for a little extra cash or work for both Lyft and Uber as a new full-time job, your options are pretty open.
When it comes to “great pay” however, how accurate are the rideshare companies’ average hourly rates for their drivers? While Uber claims you can make over $74,000 per year driving in some cities (San Francisco, in that case).
Lyft claims you can make up to $35 per hour, these figures don’t seem to align with income levels reported by real rideshare drivers. Lyft is cheaper than Uber in most instances, which means Lyft drivers generally make less than Uber drivers.
However, a lot of factors go into the money side of the equation. How many hours per week do you work? Do you work slower times (midday, early evenings) or peak times (late at night, morning traffic rushes, etc.)?
Do you live in an expensive city or somewhere with a more reasonable cost of living? Are you willing to work extra hours on holidays (during which time, companies like Uber enact “surge pricing” rates)?
Thousands of people financially benefit from working for Uber and Lyft, but these are not going to make you rich anytime soon. Just keep your income goals realistic!
Dealing with People
If you’re a social butterfly and love interacting with new people, then driving for Uber or Lyft is a fantastic way to let your extrovert energies flow. You’ll have people from all walks of life sit next to you in your car. And, many folks prefer talking with the driver over riding in utter silence.
On the flip side, you may not like what you see sometimes. If you work weekends and nights, you may be the DD for a group of drunk friends, and passengers throwing up in cars is not unheard of amongst Lyft and Uber rideshare drivers.
Uber and Lyft drivers are also subject to customer ratings. So, no matter how annoying and obnoxious your passengers may be, you are usually expected to maintain customer service with a smile in order to secure a 4 or 5 star rating.
Of course, there are always exceptions and you can decline passengers in some instances. For example, they want to bring booze into your car or lied about the number of people riding with them. But, if you’re more of an introvert then driving for Uber or Lyft might not be worth it.
Are You Ready to Work for Uber or Lyft?
With all of these factors taken into consideration, you might be feeling thrilled or burnt out right about now. Driving for a rideshare company is certainly not for everyone.
But, even if you just want an extra $100 a weekend to supplement your income or cover your hobby expenses, working with Uber or Lyft isn’t a bad bet compared to some other work from home ventures.
Have you ever thought of becoming a Lyft or Uber rideshare driver? Have you talked to your car insurance company about it? I’d love to hear your thoughts.