Uber driver insurance – what do they really need?

Uber driver insurance – what do they really need? | Insurance Business Canada

Motor & Fleet

Uber driver insurance – what do they really need?

Coverage provided by rideshare apps can fall short

Motor & Fleet

By
Nicole Panteloucos

One of the largest real estate controllers owns no homes, and one of the largest vehicle platforms owns no cars. In today’s sharing economy, companies like Airbnb and Uber manage vast networks of assets without direct ownership, leveraging technology to maximize profit margins.

The sharing economy has benefited consumers too, by empowering individuals to monetize their personal assets and generate income. We’re witnessing the platformization of almost any asset—if you want to rent out your unused RV, there’s an app for that. Want to rent out your swimming pool? There’s an app for that too.

Ridesharing services have become a particularly popular method for earning extra income, with about 52,000 registered Lyft and Uber drivers operating in Toronto alone. According to a Public First report on Uber’s impact in Canada, estimates indicate that drivers earn an additional $677 million a year in higher income through Uber.

As the gig economy continues to thrive, there are insurance considerations that brokers need to be aware of to ensure rideshare clients are adequately protected. Jeff Logan (pictured above), personal lines solutions specialist at Mitch Insurance, emphasizes the importance of add-on rideshare insurance, and highlighted why relying solely on personal auto insurance and built-in coverages from rideshare apps often isn’t sufficient.

If Uber has insurance, why do drivers need rideshare cover?

When a rideshare app is turned off on a driver’s phone, their personal auto insurance takes over and provides necessary protections. Similarly, when a driver is actively on a trip and an incident occurs, insurance offered by Uber and Lyft will kick in, protecting both property damage and liabilities for drivers and third parties.

However, Logan noted that there is an important gap to consider: when a driver is logged into a ridesharing app but hasn’t yet accepted a trip. While Uber and Lyft provide some coverage during this period, limits tend to be lower. In Ontario, Uber and Lyft’s third-party liability coverage is $2 million during trips, but drops down to $1 million when a driver is in between trips. This means that depending on the circumstances of an accident, drivers may not have all the protection they need. “If I get into an accident while I’m driving for Uber, there’s a chance their policy might not have the increased accident benefits that I need or want,” Logan said.

Add-on rideshare insurance fills this gap by offering additional coverage for elements including third-party liability, direct compensation, and accident benefits.

Logan also highlighted that the ridesharing market has “leveled out” in recent years as companies have determined effective practices. “With Uber, you have to provide proof of insurance with a rideshare endorsement to even sign up for the app.”

As rideshare drivers are typically more distracted than those on average, as they constantly check for new jobs, having as much coverage as possible is always recommended. “Rideshare drivers typically engage with the app while driving, which can divert their attention. Additionally, if a driver is working a late-night shift and picking up passengers from a bar, they might have four or five intoxicated passengers in the back, which can be an added risk,” shared Logan.

How can brokers protect rideshare clients?

To ensure adequate protection, when discussing personal auto insurance policies with clients, brokers should think about the following:

Ask clients about rideshare: Many drivers may not be aware of the need for rideshare coverage. Ask if clients drive for rideshare platforms to ensure they have appropriate insurance coverage.
Uber Eats and delivery services: If clients deliver food through services like Uber Eats, they may require separate business auto insurance. This type of coverage is typically more expensive due to the increased risk of driving without passengers.
Collision and comprehensive coverage: In Ontario, Uber’s built-in insurance policy offers coverage for vehicle loss and physical damage. However, it’s important to note that this coverage applies only if the driver’s personal vehicle insurance includes collision and comprehensive coverage. Brokers should make sure rideshare clients have this important add-on.

Asking questions like the above can help brokers ensure clients are well-prepared for the new ways we live and work.

“Even five years ago, the sharing economy wasn’t positively looked at in a social aspect,” said Logan. “Now that the younger generation is coming into the workforce and looking for more autonomy and extra ways to meet their needs, it’s become more of a positive experience for people.”