Uber, Lyft Expand Insurance to Cover Drivers Between Rides Ridesharing startups Uber and Lyft are working to bridge the 'insurance gap' with updated protection policies for their drivers.

As peer-to-peer ridesharing services Uber and Lyft continue to grow, so do questions about their liability – which is why the companies are taking new steps to make sure their drivers are protected.

Lyft, whose drivers are recognizable by the pink mustaches affixed to the front of their vehicles, announced this week that it will now provide insurance protection for drivers who are available to give rides but haven't picked up any passengers. Until now, there were uncertainties about whether drivers were covered if they were active but didn't have passengers. Lyft, which is also in the process of raising $150 million in Series D funding, plans to roll out the new policy state by state.

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Uber is making a similar move for drivers in its UberX service, which competes with Lyft. A statement on the company's blog explained that, as of today, an UberX driver is covered so long as the app is live and the driver is free to offer a ride. However, this policy will go into effect only if the driver's personal insurance will not pay in the event of an accident. The company is currently facing a wrongful-death lawsuit, after a 6-year-old San Francisco girl was hit and killed by an Uber driver who was waiting for a fare on New Year's Eve.

It's no coincidence that these changes are coming just ahead of Seattle's City Council passage of legislation requiring overarching regulation of the ridesharing industry.

These changes are also in line with last month's announcement of the Peer-to-Peer Rideshare Insurance Coalition, which aims to find a way to best regulate the evolving transportation economy, counts Lyft, Sidecar and Uber as members, as well as providers like Allstate and Farmers and the California Public Utilities Commission.

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