What is a Three-Period System in Rideshare?
Ridesharing has really changed how we get around, making our regular trips much easier, especially when we’re traveling or commuting after drinks. Yet as many have found, with this convenience comes a tricky maze of insurance coverage that can leave both drivers and passengers feeling a bit lost and worried about their safety in the event of a crash. At the heart of rideshare insurance and how they handle these situations is the three-period system, which outlines the coverage you get from services like Uber and Lyft. Whether you’re driving or just riding, understanding this system is important because it can greatly affect your safety and financial well-being when using these services.
The three-period system used by top rideshare companies isn’t just a bunch of insurance jargon; it’s a key concept that can really impact your life, especially if you find yourself in a rideshare crash. This system breaks down your rideshare experience into three clear phases, each with its own important insurance details that you need to know.
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Breaking Down the Three-Period System
Picture yourself as a rideshare driver going about your day. Your experience is divided into three distinct periods, each with its own important insurance details that you should know:
- Period 1: You’ve opened the app and are waiting for a ride request. This is often called the “waiting phase,” and during this time, your coverage is quite limited.
- Period 2: You’ve accepted a ride and are on your way to pick up your passenger. At this point, your insurance coverage increases significantly, reflecting the greater responsibility you have as a driver.
- Period 3: Your passenger is now in the car, and you’re taking them to their destination. This phase provides the best insurance protection, ensuring that both you and your passenger are covered during the ride.
It’s important to understand these periods as the level of insurance coverage can change dramatically from one phase to the next. Let’s explore deeper into each period to see how they affect both drivers and passengers.
The Waiting Game: Period 1
As a driver, Period 1 in the three-period system is when you’re most exposed in terms of insurance. During this time, you’re eagerly waiting for that first ride request, but here’s the catch: most personal auto insurance policies won’t cover you while you’re in this waiting phase. Why? Because you’re using your car for commercial purposes, which changes the insurance rules significantly.
Rideshare companies do provide some coverage during this period, but it’s pretty limited. As of 2024, here’s what you can typically expect:
- $50,000 per person for bodily injury
- $100,000 per crash for bodily injury
- $25,000 per crash for property damage
While these amounts might sound relatively high at first, they can quickly fall short if you find yourself in a serious crash. That’s why we suggest that drivers look into getting extra rideshare insurance to cover the gaps in the three-period system. It’s not just about protecting your car; it’s really about securing your financial future and making sure you’re covered throughout all stages of your rideshare activities.
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The Pick-Up Mission: Period 2
Once you accept a ride request, you enter Period 2 of the three-period system, and this is where your insurance coverage gets a big boost. The State of Ohio requires rideshare companies (called Transportation Network Companies, or TNCs) to have $1 million in third-party liability insurance because of the recognition that the risks of harm go up after you accept a ride. Additionally, many rideshare companies provide uninsured/underinsured motorist coverage, which ensures you’re covered if you’re in a crash with a driver that doesn’t have enough insurance.
These additional coverages are critical because it reflects the higher risks you face while driving for rideshare companies. If you happen to get into a crash during Period 2, it’s very important to document your status in the app. Always take a screenshot of your active ride request, including the date and time. This simple step can be a lifesaver if there’s any confusion about which insurance policy should kick in during the three-period system.
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The Active Ride: Period 3
Now that your passenger is in the car, you’ve reached Period 3 of the three-period system. This is where you get the best insurance protection available. During this phase, your coverage is similar to Period 2, with that critical $1 million liability coverage to keep you safe in case of an accident.
But remember, while $1 million sounds like a lot, serious accidents can quickly rack up costs that exceed this amount. If there are multiple vehicles involved or if someone gets seriously hurt, expenses can skyrocket, which is why many drivers opt for extra umbrella policies for added peace of mind, even in this final stage of the three-period system.
If you’re juggling multiple rideshare or delivery apps at the same time, managing your insurance can get tricky. Each company’s policy usually only kicks in when you’re actively driving for that specific app. So, keeping careful track of which app you’re using at any moment isn’t just smart; it could be imperative if an accident happens, ensuring you have the right coverage when you need it the most. This is especially true if an injury is involved and a personal injury claim is filed.
What This Means for You
Whether you’re driving or riding, it’s important to understand the three-period system for rideshare insurance. For drivers, this system illustrates how important it is to have solid coverage that protects you and your passengers at every stage of ridesharing. There are some big gaps in coverage during Period 1, and the deductibles can be high in Periods 2 and 3. That’s why getting extra rideshare insurance is a smart move. It helps shield you from unexpected situations and financial stress that can come from crashes. Nobody ever wants it to happen but it’s better to be prepared for the chance it does.
At Cooper Elliott, we’ve seen how understanding the details of the three-period system can really change the outcome when accidents happen. If you ever find yourself confused about insurance coverage, we strongly recommend getting professional legal advice. Our team is here to help you manage the challenges of rideshare crashes and insurance claims, making sure your rights are protected every step of the way. Remember that the rideshare industry and its insurance rules are always changing. If you need our help or have questions, don’t hesitate to reach out. Your safety and peace of mind are our top priorities, and we’re here to support you whenever you need it.
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