Insurance Risks in the Rideshare Industry

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Recently, the ridesharing company, Uber, has expanded its operations across Canada. Ridesharing is a convenient alternative to traditional tax services, but before you become a rideshare driver or passenger, it is important to understand the risks associated with the industry.

Rideshare companies connect ride-seekers to drivers through a mobile app. Drivers then pick up their passengers and transport them to their desired destinations.

Fares typically consist of a base fare and fees per kilometre. Passengers enter their credit card information into the app before requesting their ride. Their credit cards are charged once they reach their destinations, and the rideshare company compensates the drivers. No cash is ever exchanged.

Canadian UberX drivers may have their auto insurance policies fail them in a time of need. The issue is that most personal auto insurance policies exclude coverage when the vehicle is used to carry passengers for compensation. In Ontario, an Ontario Policy Change Form (OPCF) #6A must be added to the standard auto insurance policy to provide coverage.

Misleading your insurance company can have serious consequences. Rideshare drivers who lie about their vehicle's commercial use on insurance applications could have their policies voided. Additionally, drivers could face potential fines as high as $250,000 - or even jail time - if they are caught misleading their insurance provider.

Uber states that every ride initiated through UberX is insured under the company's $5 million contingent insurances policy. However, insurance experts have warned that Uber's insurance is a non-owned automobile liability policy which provides coverage only if Uber is proven to have been negligent. The policy is meant to protect Uber from liability, but cannot shield drivers from damages.

These risks are not only a concern for drivers. If you get into a car with a rideshare driver who is not properly insured, you risk having no insurance protection should an accident occur.

For passengers, mitigating the risks associated with ridesharing is simple. Before a ride, ask your rideshare driver to provide proof of commercial insurance.

If you are planning to become a ridehsare driver, there are precautions you can take to limit your risk.

  1. Obtain commercial coverage. While this type of insurance is typically more expensive, it's the only way to guarantee coverage in the event of an accident.
  2. Disclose any pertinent information to your insurer. By letting your insurer know of changes in how you use your personal vehicle, you will avoid fines and gaps in your coverage.

Until provinces decide how to regulate rideshare service from an insurance standpoint, holding off on becoming a driver is the only way to completely mitigate the above risks.

Update:

Uber now holds a fleet auto insurance policy with Intact and Northbridge."All drivers, passengers and vehicle owners in Ontario using these ridesharing companies are covered from the moment the app is turned on to the moment passengers exit the vehicle. When the app is turned off, the vehicle owner’s personal auto insurance policy applies."

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