Uber. Heard of this company? Uber is a company that independently contracts drivers to use their vehicles as makeshift ‘taxis’. The entire business model is based off a mobile app where someone can request a driver and the driver has the ability to see how close they are to their next ‘job’.
There has been much speculation in the news recently in regards to drivers using their vehicles for commercial purposes and how it impacts their current insurance policies. What happens if a driver gets into an accident? Does their policy cover the damages if the Uber driver is at fault?
More and more drivers and insurance providers are finding: Those who work for companies like Uber, Sidecar and Lyft, which link drivers with customers through apps, are stuck in an insurance limbo that could leave them saddled with major costs after an accident.
Drivers must have personal insurance; companies must carry $1 million excess liability policies that cover damages in the case of an accident that is their driver's fault. Is this enough? It seems like huge gaps remain, and I would be worried if I were involved in this venture.
Most drivers' personal insurance policies, which would cover damages to themselves or their car, are not likely to cover claims for accidents that happen while transporting paying passengers. Most personal policies have a “business exclusion”. Most personal policies do not cover accidents "arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance." They may cover shared-expense car pools, according to the state Department of Insurance, which issued a warning to motorists about the insurance gaps this month.
"It's very clear in California: If you drive your car and make money on it, you need a commercial license (and thus commercial insurance)," said Pete Moraga, a spokesman for the Insurance Information Network of California. "But because it's so new, insurers don't ask the question, which does open the process up to fraud." What that means is, if you are in an accident you can try to submit a claim. If you lie (which is insurance fraud), you may be covered, but that does not seem like the smart move here.
Many drivers may be tempted to hide such work from insurers, to save $$. The “right” option, commercial insurance, can be difficult to find and be expensive.
As this is all new, the insurance companies will likely develop some Uber-type policies, but to my knowledge that has not happened yet.
For now, if you are an Uber-driver or an Uber-passenger, you do so at your own risk.