Uber vs. Lyft

Both Uber and Lyft have been in the news for the last few years, making waves in the taxi industry, insurance industry, and with state and local regulators. Maybe you’ve never taken an Uber or Lyft ride anywhere, but you probably know someone who has. All over the world, in dozens of countries and major metropolitan areas, from San Francisco, where it all began, to Minneapolis, Toronto, and Paris, Transportation Network Companies (TNCs), also called ridesharing companies, are now popular alternatives to traditional transportation services. So, what are the differences between the two? Uber vs. Lyft: does it really matter which one you choose?

Both customers and potential drivers are wondering the same thing. Which company is better: Uber or Lyft? What is the difference, anyway?


There are two major TNC players: Uber and Lyft. Other companies that offer similar services also exist, but this article will focus on the two that have cornered the bulk of the ridesharing market. Both TNCs are relatively new. Uber was founded in 2009 and Lyft in 2012, both in San Francisco. Between the two, Uber has expanded worldwide to almost 70 countries and more than 400 cities while Lyft is available in just over 200 cities and 7 countries. If you live in a large metropolitan area in the U.S., chances are you’ll be able to choose between both options. However, Uber’s broader expansion means they have a comparatively larger number of drivers on the road.

When you imagine Uber or Lyft, you may think of a taxicab. You hail a car, the driver picks you up, and then brings you to your intended destination for a fee. Both TNCs have expanded beyond this basic model, and offer a variety of services, depending upon what you want in a ridesharing experience. Uber has:

  • UberX: lower priced option, up to 4 riders
  • UberXL: lower priced option, up to 6 riders
  • UberLUX: high-end sedans, only in Los Angeles
  • UberSelect: high-end sedans with leather seats, up to 4 riders
  • UberBLACK: luxury service, black sedan or SUV
  • UberPOOL: carpool option, only available in a few cities
  • UberTaxi: hail a traditional taxi with the Uber app, only available in a few cities
  • UberAssist- transportation for the elderly or disabled
  • UberEATS: food delivery service

The Lyft choices are much more limited, but it could be argued that they have chosen to focus on those options that are the most popular. They have:

  • Lyft- up to 4 riders
  • Lyft Plus- up to 6 riders
  • Lyft Line- carpool option, only available in a few cities


When using Uber or Lyft, everything is done through their app, which is available on all smartphones with Android or iOS. Uber also has a Windows phone app. After you open the app, you simply set your pickup location and the type of car service you want. Then, you are matched with a driver in the area and are shown information about him or her. You can see their profile picture, customer rating, the type of car they drive, and their estimated time of arrival. From beginning to end, you can track their car using GPS. Payments are done through the app as well. Only Lyft offers customers the option of tipping their driver after the completion of their ride, while Uber does not (although this may change soon).

Both apps have a rating system that allows customers to rate their driver based on their performance. Drivers can also rate their passengers, although you will not see the rating you received as a customer; this is only for drivers. The mutual rating system helps to weed out drivers with poor performance records and rude passengers.

Cost and efficiency comparisons have been made between both TNCs. Most studies have found that the customer satisfaction is about even. Uber and Lyft both have a similar base price, rate per mile, and fees (minimum fare, cancellation fee, and safety fee). So, either way, you will pay about the same. Be on the lookout for sales and special promotions, as that can help lower your fare price. Additionally, in metropolitan areas where both companies operate, the time it takes to pick up passengers and get them to their intended destination is about the same.

One major difference are the added fees that both TNCs add to trips that occur during busy periods like morning and evening rush hour, after local events, and Saturday nights downtown. These are periods when rider demand is high compared to the number of drivers in the vicinity. Uber refers to it as surge pricing, while Lyft calls it Prime Time. The fees differ between the two. Lyft caps the fee at three times the normal base rate while Uber’s varies depending upon rider demand: the price can be as much as eight times higher than the base rate.


The surge fares are beneficial for the drivers, as it helps to supplement their fares during those peak periods. With or without the fees, drivers for both TNCs reported making a decent living, depending upon the number of rides they complete per day.

There are other advantages that Uber and Lyft offer their drivers as well. There are incentives for people to sign up as a driver, or to switch from one company to the other. Depending upon the location, the reward can be several hundred dollars. There are requirements to receive the start-up bonus, however: you must complete a certain number of rides within the first thirty days. The number of rides has varied over time, so it is best to check with each company to find out their current incentive plans. If should be noted that you can drive for Uber and Lyft without any penalties from either company.

In order to become a driver, you must first satisfy certain requirements. For both TNCs, you need to be at least 21 years old and have a valid driver’s license for at least one year prior to applying. Your vehicle must be relatively new, have seat belts, and you must pass a background check. Once you pass the initial hurdles, you can start driving. Your account stays active if you take at least one trip per month. Lyft allows its drivers to download the driver app to their personal phone. With Uber, you can either use your own phone, or receive a smartphone with the Uber app preloaded. If you use a company phone, you will have to pay a $10 weekly fee.

While neither Uber nor Lyft considers its drivers employees, this may change with pending lawsuits. Currently, drivers are considered independent contractors. This means that they do not enjoy any employee benefits like health insurance and covered vehicle maintenance. However, there are certain benefits still available. For example, drivers who receive unfair tickets for airport pickups may be reimbursed. You may also claim losses for damages to your car caused by passengers.


The auto insurance industry is slowly evolving its coverage options to provide protection for ridesharing vehicles. According to the Insurance Information Institute, there are three driving periods in which your standard personal auto insurance policy will not provide coverage: when a driver opens the rideshare app but does not yet have a passenger, when the driver is traveling to pickup a passenger, and when the passenger is in the car. Basically, anytime a driver has the app turned on and is in the car, whether there is a passenger or not, the auto policy will not cover any incidents. A personal auto policy is for non-commercial driving. Any commercial venture, whether it is ridesharing, deliveries, or any other business requires different insurance. Additionally, if you do not disclose your ridesharing driving activities to your insurer and they find out, your policy may be cancelled.

There are now two different types of insurance policies to choose from: commercial auto insurance and rideshare insurance. Commercial auto insurance covers vehicles that operate for business purposes. This means that it includes higher liability coverage, but is more expensive. Major insurance companies like Allstate, GEICO, USAA, and others now have ridesharing insurance. This is specifically designed for drivers who work for a TNC and costs less than commercial auto insurance. It covers those three driving periods listed above that are generally excluded from a traditional personal auto policy.

Uber and Lyft also offer their own insurance policies. If you work as one of their drivers, you are automatically covered, but you are still required to also have a personal auto policy. Both companies include $1 million in liability coverage per incident. This is only for incidents that occur when the driver has a passenger. If you are concerned about getting into an accident, you can purchase their comprehensive and collision insurance. If an accident happens during a trip, then you must first file a claim with your personal insurance provider. Anything that is not covered will then be filed with your Uber or Lyft insurance. Be aware that each has a high deductible and only covers accidents than occur while you have a passenger in the car.

If you want to learn more about your auto insurance options, speak with your independent insurance agent. They will have knowledge and experience to recommend the best policy for Uber or Lyft drivers.

Other Enhanced Insurance articles related to the sharing economy:

A Lyft Out of An Uber Mess

Uber, Lyft, and AIRbnb are Innovative but are they good for Society

Are Uber and Lyft Innovators or Scofflaws

You Wouldn’t Trust a Cab without Insurance Would You

The Uber Risk of the Sharing Economy

Auto Insurance Coverage for Taxis

Have Uber and Lyft Used Insurance to Their Advantage

Insuring Bitcoins and Other Cryptocurrencies

A Guide For the Best Taxi Insurance

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

Jenna Christianson has a passion for research and writing. She has worked as a researcher for a variety of organizations ranging from genealogy to the transportation industry and everything in between. She is excited to be a part of the Enhanced Insurance team!

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