Lyft hikes service fee for rides as insurance costs rise

(Reuters) — Lyft Inc. is increasing the service fee its U.S. riders pay directly to the company to cover higher insurance costs, the ride-hailing company said.

The increase averages less than 50 cents per trip nationally, a Lyft spokesperson said. The company pays for drivers' insurance when they are working on its platform.

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

New data from YipitData showed Lyft increased its published service fee for rides in virtually all U.S. markets in the first week of October.

The service fee went up by an average of about 60 cents, implying a 3% increase in the cost of an average ride, and an 18% increase in the service fee, according to YipitData.

The service fee, which goes directly to Lyft, is an additional fee added on a per-ride basis that covers certain operating costs and safety measures such as insurance and background checks.

Lyft added a 55-cent surcharge earlier this year that went directly to the driver to help drivers deal with higher gasoline prices. The program was stopped in late September.

“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,” YipitData analysts said.