Canadian Underwriter

UberX drivers expected to have commercial insurance: Shop Insurance Canada

May 19, 2016   by Canadian Underwriter

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UberX drivers using personal policies while operating as a paid ride-share operative are breaking the law and need to check with their insurance providers to ensure they have appropriate coverage, suggests Shop Insurance Canada.

uber-370x248“If a vehicle is used for any kind of business, insurance companies will expect customers to take out a commercial auto policy,” notes a statement Wednesday from the company, which offers an online auto insurance quoting tool.

“Drivers working for UberX and using their personal auto insurance are not properly covered in the event of a collision or other incident. By the Ontarian and Canadian law, these drivers should be operating with commercial coverage.”

The rise of Uber and other ride-sharing services has shone a spotlight on commercial auto insurance coverage, notes the Toronto-based company.

“It is often the case that customers are not completely clear on the rules of when a vehicle should be covered by a commercial policy. This leads to people just sticking with their personal policy, which can end up being a costly risk,” the statement notes, pointing out that insurers will “not pay out a claim on a personal policy if the driver is found to have been using the vehicle for business, or the driver was an employee of a company.”

Related: Nearly two-thirds of Canadians say Uber should have same regulations as taxi industry: Angus Reid survey

Shop Insurance Canada notes that vehicle owners falling into the following criteria are almost certainly in need of commercial auto insurance:

  • the vehicle is used to collect or delivers goods, supplies, food or messages;
  • the vehicle is used as a method to take passenger for pay (including ride-sharing companies such as Uber and Lyft);
  • a vehicle is customized with equipment or goods that directly support a business, such as permanent tool boxes, winches and food boxes;
  • the vehicle is owned by a business or registered to a business; and
  • employees are allowed to drive the vehicle for business purposes.

Uber’s launch in a number of cities across the country had raised concerns around insurance coverage and protection for drivers and riders alike.

The Alberta government has introduced new rules to regulate ride-hailing companies like Uber. Among other things, drivers will need a professional Class 4 licence, as well as either commercial insurance or a new insurance policy tailored to the industry.

The position differs from that taken by Saskatchewan, where the government announced this past March the province would not be creating special regulations for ride-sharing companies. And earlier this month in Toronto, city council approved new rules for taxis and UberX, thereby allowing regular drivers to pick up passengers without a taxi licence, although both types of drivers must get $2 million in liability insurance.