Lyft Raises Service Fee to Pass Higher Insurance Costs onto Customers

Photo: Drew Angerer (Getty Images)

Lyft is raising its service fee for riders in the U.S. in an effort to make up for higher insurance costs the company is facing. A spokesperson for Lyft told Reuters that the increase will be an average of less than 50 cents per trip nationally.

“Lyft is facing insurance inflation pressures, and we’ve nominally increased service fees to help offset these costs,” the spokesperson said.

Lyft reportedly pays for its drivers’ insurance when they are using the company’s platform. Except, I guess, Lyft doesn’t really pay for the insurance. You, the rider, do. Ah, Capitalism!

In addition to insurance, the money also reportedly goes to Lyft’s other safety measures and background checks for drivers.

Reuters reports that new information from YipitData shows that Lyft increased its service fees for riders in just about every U.S. market — about 150 in total —early this month. New York City was spared from the increase. The outlet reports the Lyft service fee increased by around 60 cents, or three percent of the cost of an average ride, at that time.

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Earlier this year, Lyft added a separate 55-cent surcharge that was meant to help drivers (and go directly to them) who were being negatively impacted by higher gas prices. As you may have imagined, that program is now gone. It has been replaced by the Lyft Direct debit card that gives drivers up to seven percent cash back on gas.

An analyst for YipitData says that what consumers pay for a Lyft ride won’t change very much because of the implementation of the increased fee for insurance, but it will change who gets the money.

“Since the fuel surcharge went directly to drivers and the service fee goes directly to Lyft, it suggests that Lyft would take more of each fare, assuming no changes to the other fare components,” the analyst told Reuters.

For the record, Lyft has a market cap of $4.38 billion. I just feel like you’d want to know that.