When will Uber drop their drivers

What you need to know about driving a car for Uber

Driving for Uber seems like a pretty easy way to make some extra cash, but there are a handful of factors that make it more complicated than you might expect.

Many Uber drivers make a decent living driving people around, whether they do it full-time or part-time, on top of their main income, but it's important to remember that there is more to driving for Uber than just signing up, getting approved to get into your car and people drive around. Here are a few things to keep in mind when thinking about becoming an Uber driver.

Car insurance can be a difficult situation

When I started becoming an Uber driver, I couldn't even think of auto insurance, but my brain clicked when I saw the word "insurance" during the sign-up process. It turns out that most insurance companies do not offer insurance coverage if you are using your car as a kind of taxi.

Uber does automatically give you its own self-insurance coverage, however, but it's the bare minimum that most drivers wouldn't ordinarily want (there's a $ 1,000 deductible for collision protection). This still seems fine, but Uber's insurance will only cover you if your personal insurance doesn't.

What's the problem here? The problem is that when you file the incident report with Uber, the first thing they do is call your personal insurance company to see if you have comprehensive and collision-proof coverage (because Uber doesn't offer this for you if you don't have it in person). , and if your insurance company determines that you were driving for Uber (or that you were driving for Uber, period) at the time of your accident, many veteran Uber drivers say they are likely to drop you like a rock and cancel your entire life Politics with them for breach of terms. It turns out that when you drive for Uber, most insurance companies don't like it all.

It can do it much It is harder to find a new insurance company without increasing your premium. Getting dumped by an insurance company is like your credit score.

So what are your options? There are a small handful of Uber-friendly insurance companies who don't care about you driving for Uber but who might deny your claim. However, there are some insurance companies that offer special contracts that give drivers full coverage while driving for Uber. However, these companies are only slightly different from the state in which you live. In Indiana, for example, Erie Insurance and Geico both offer coverage. Personally, I haven't found an insurance company that can make me an offer that isn't astronomically more expensive than what I'm paying for now.

You can also get commercial insurance from virtually any insurance company, even if they are not particularly happy with their personal policies, but these types of policies tend to be very expensive.

Uber takes a 20% cut

Not too surprising, but often something you don't think about. Uber has to make money somehow, and he does it by taking a small portion of his income.

20% isn't a lot, but it can add up. If you give a ride that ends in a $ 15 fare, Uber gets $ 3, which gives you a cold $ 12 income. While that's still a decent amount, if you end up making $ 600 a month in plans, Uber gets a whopping $ 120 of them. So don't base your income solely on the tariffs themselves.

You all pay your own taxes

In addition to Uber's 20 percent cut, you'll also have to pay 100% of the taxes owed on that income. Welcome to the life of an independent entrepreneur!

If you're an employee of a company, they'll pay about half of your FICA taxes while you pay the other half (in addition to the income tax you have to pay that is likely to be withheld). However, if you are an independent contractor, you will have to pay every penny of your FICA taxes. You will get 1099 as tax season approaches instead of a W-2.

There are a handful of things you can do to minimize your tax payments, such as: B. Make sure you write off whatever expenses you can. It is best to speak to an accountant about your options.

Your car must be newer and have four doors

If you've always wondered why you only see Uber drivers driving newer cars, it is because Uber requires drivers to do it.

At the time of this writing, your car must be 2005 or newer, and it must have four doors too, so if you drive an older vehicle or coupe, then Uber won't allow you to use such a car.

Your car must also have no cosmetic or mechanical damage. This is not a requirement in and of itself, but it can affect your driver rating if a passenger is disturbed by those screeching brakes.

The approval process can take a while

When signing up as an Uber driver, you'll need to do a background check and a driving behavior review. These things are not instantaneous, so it will take at least a few days to get a driver's license, and sometimes even longer.

Some Uber drivers have told me it took them months to approve because something came up in their background check and Uber needed to verify this through other sources. It usually turns out to be nothing, but it's just Uber doing its due diligence.

Your car maintenance costs will go up

You probably know that once you start driving for Uber you'll be spending more on gasoline, but with gasoline prices this low, that might not be a big problem for you. However, what should be a big problem is the cost of maintaining your car.

These costs increase the more you drive your car around. You need to change the oil more often and the parts need to be replaced more often than normal. If you put more miles on your car and drive it around a lot more than you've done before, the chance of something breaking increases significantly.

My advice? If you plan to drive for Uber, find a reputable mechanic and become his friend.

In the end, signing up for a ridesharing service like Uber or Lyft isn't all that easy, but it's not overly complicated either, as long as you can get the entire insurance problem under control. Lyft has been known to make it a bit easier to sign up and get approval, but they also have a higher deductible on their insurance ($ 2,500 instead of $ 1,000). So keep that in mind.

Photo credit: Uber, Images by Money / Flickr, Sean McMenemy / Flickr, Chris Potter / Flickr, Ryan Ruppe / Flickr, Bob n Renee / Flickr