The continuing challenge of insurance for Uber and its drivers

A few days ago, an Ontario judge ruled that Uber is not operating as a taxi broker and that it has not breached any city bylaws. While this is a victory for Uber, this ruling does nothing to solve the insurance problems of Uber’s drivers.

As things stand, a consumer who uses her/his personal automobile to earn some extra money on the side by driving for Uber is doing so at great financial risk to themself. With the exception of some coverage for Accident Benefits, the Ontario Automobile Policy provides no coverage if an automobile is used as a taxicab or to carry passengers for compensation. The Financial Services Commission of Ontario has issued a bulletin warning consumers about this gap in coverage.

Although coverage under the standard Ontario Automobile Policy is severely limited while a car is being used to taxi passengers, in the event of an at-fault accident the driver’s insurance company would be responsible for providing liability coverage up to the minimum statutory limit of $200,000. After settling with the injured third party, the insurer may then turn around and seek recovery from its policyholder. Any settlement in excess of the statutory limit will be entirely the driver’s problem. Or it will be the injured third party’s problem in the event the driver doesn’t have the financial means to pay the settlement.

With respect to physical damage to the policyholder’s own automobile, the insurance company would be responsible for compensating a loss payee for the unpaid portion of a car loan. Again, though, the insurer could then seek recovery from its policyholder.

For its part, Uber claims to have contingent automobile insurance. But the company has battled attempts to disclose details of the coverage. According to Uber, the details of their insurance coverage are ‘a trade secret’. As a result of all this mystery surrounding the company’s insurance arrangements, it is unclear whether Uber’s insurance provides coverage for Uber’s negligence only or whether there is coverage for the negligence of their drivers. Ian Black, general manager for Uber’s Ontario operation, has said ‘getting insurance right is probably the thorniest issue’ facing the company. Mr. Black has described the company’s efforts to work out a solution with Canadian insurers as ‘the hardest part of the work we need to do now’.

With its drivers left in the dark as to what coverage might or might not be available to them through Uber, consumers using the family car to ferry passengers around for Uber are doing so blindly with respect to their insurance situation.

The day may come when consumers are able to add coverage to their automobile policy that will respond to a claim while driving for Uber. Until that day comes, Uber’s drivers and their fare-paying passengers continue to operate in an insurance no-man’s land.