Driving Awareness

Ride-sharing is clearly growing in popularity. In fact, issues related to ride-sharing seem to be changing so quickly and regularly that it would be safest to consider the following views to be as of September 24, 2015.

Despite the growing popularity in ride-sharing, though, questions remain around the breadth and insurance coverage available when it comes to protecting consumers. Riding shotgun, brokers are in an enviable position to lead the insurance conversation that needs to happen with consumers. Consumers are using ride-sharing services more and more, but may not be fully versed on all the facts.

Those facts include the following:

1. ride-sharing is popular with consumers in many parts of Ontario, not just in large urban centres like Toronto;

2. there are insurance gaps for ride-sharing drivers and passengers in the province right now;

3. consumers are unaware of their insurance gaps, their risks and limits, whether they are drivers or passengers; and

4. brokers, who serve as the conduit between insurance companies and consumers, must help drive awareness.

UBER, PLUS MORE

There are many ride-sharing programs in the Ontario market today, but the brand attracting the most controversy and attention is Uber. An important point to clarify, however, is that not all these “Ubers” are the same.

Uber is a technology platform, and various iterations of the technology’s use are available in Ontario. Uber Taxi and Uber Black are two examples of the Uber brand, neither of which applies to the insurance risk concerns often discussed and that seem to make the headlines. A very important distinction is that it is UberX that should be the root of the industry’s focus.

UberX is the ride-sharing service that matches riders with independent drivers who use their own personal vehicles. These independent drivers are not trained, licensed or insured professionally to do so.

WHY THE CONFUSION?

Consider the message posted on Uber’s website regarding becoming a driver of UberX:

Do I need a special insurance policy to drive with Uber?

• No. Your personal insurance policy is all you need. Please make sure you carry the appropriate insurance to cover your liability to other parties (liability insurance), damage to your vehicle (optional collision insurance) and injury to yourself (health insurance). If you are unsure about your coverage, check with your insurance provider.

Am I covered for third-party liability by a commercial insurance policy?

• Yes. You are covered by commercial auto liability insurance for ride-share drivers, which protects you against third-party liability both during an Uber trip and while you are waiting for a ride request through the Uber app.

THE REALITY

Uber, the company, has insurance in Ontario protecting the commercial enterprise of Uber. Its insurance policy is not designed as primary coverage to be extended to the company’s drivers or passengers of the UberX experience. The primary insurance coverage must be absorbed by the drivers’ personal auto policies.

Therein lies the dilemma. Current personal auto policy wordings today in Ontario exclude coverage when a private passenger vehicle is being used as a taxicab. To be clear, an UberX driver’s personal insurance policy is excluded/void when driving for UberX.

COVERAGE IS AVAILABLE TODAY

As of September 24, 2015, just one insurer has publicly expressed interest in exploring coverage related to Uber. Ontario brokers look forward to learning more about the company’s coverage solution.

That said, no insurers as of September 24, 2015 (either broker-driven insurers or direct/agent-driven insurers) have filed rates with the Financial Services Commission of Ontario. A commercial facility taxi policy is all that is available for UberX drivers to ensure that they are properly protected.

BROKERS MUST LEAD AWARENESS

The sharing economy has disrupted mature industries, such as hotels and automotive, and now taxi services. By providing consumers with convenient and cost-efficient access to resources without the financial, emotional or social burdens or ownership, popularity with the service runs high. But so does insurance exposure.

When considering the value of a broker’s advice, consider this line of thought: the economy is on the tipping point of change and with questions about insurance coverage increasing in step with this economic shift, brokers can help provide advice and answers to ensure appropriate coverage is extended.

As ride-sharing and other sharing economy industries continue to grow in popularity, brokers can seize the opportunity to showcase their value: inform the public; educate consumers on their options; and advocate for coverage from the insurers.

Informed advice will prove all the more important as these shifts in economic norms continue to unfold.

BUILD NEW PROCESSES

When reviewing an application, brokers must always ask the question: Is this vehicle being used to carry passengers for compensation?

If the answer is yes, confirm if the driver is collecting compensation in a carpooling scenario or in a ride-sharing scenario.

•     Carpooling: This would be carrying acquaintances to or from work for compensation while, and only while, the insured driver is on his/her own way to or from work. For carpooling: 6A coverage could be an endorsement option on a personal lines policy; or

•     Ride-sharing: This would be a program comprised of companies like UberX that allows ordinary motorists to turn their personal cars into a prearranged transportation service in exchange for compensation. If the activity is determined to be ride-sharing, a facility policy issued with taxi rates is all that is available in the industry as of September 24, 2015.

ADVOCATE FOR COVERAGE

There are many positives that ride-sharing services bring to the consumer. The issue for Ontario brokers is not the business model employed by Uber and other sharing programs; the issue is to ensure proper insurance is in place to fill the gaps. 

Questions are also outstanding with respect to how taxi industry regulations can change to create a level playing field, and how insurers can assess (and price) the risk.

But these unanswered questions are temporary, while positives that change brings will be long term.

The sharing economy is here to stay. Brokers must be ready to respond when advice for consumers is required.

When reviewing an application, brokers must always ask the question: Is this vehicle being used to carry passengers for compensation?

If the answer is yes, confirm if the driver is collecting compensation in a carpooling scenario or in a ride-sharing scenario.

• Carpooling: This would be carrying acquaintances to or from work for compensation while, and only while, the insured driver is on his/her own way to or from work. For carpooling: 6A coverage could be an endorsement option on a personal lines policy; or

• Ride-sharing: This would be a program comprised of companies like UberX that allows ordinary motorists to turn their personal cars into a prearranged transportation service in exchange for compensation. If the activity is determined to be ride-sharing, a facility policy issued with taxi rates is all that is available in the industry as of September 24, 2015.

ADVOCATE FOR COVERAGE

There are many positives that ride-sharing services bring to the consumer. The issue for Ontario brokers is not the business model employed by Uber and other sharing programs; the issue is to ensure proper insurance is in place to fill the gaps.

Questions are also outstanding with respect to how taxi industry regulations can change to create a level playing field, and how insurers can assess (and price) the risk.

But these unanswered questions are temporary, while positives that change brings will be long term.

The sharing economy is here to stay. Brokers must be ready to respond when advice for consumers is required.