The Uber Insurance Gap That Could Cost You Big as a Driver or Passenger


As many of you already know,  Uber is a smartphone app that pairs riders with people who will give them a ride, similar to a taxi. These drivers are registered and have to maintain a score of 4.6/5 to keep their status as a driver, and often provide perks like free bottled water, cell phone chargers, and don’t accept tips. Uber rates differ from cabs in that the rates fluctuate depending on demand, and often geography.
This novel business model has seen a number of issues that have arisen since the conception of Uber, and it’s competitor lyft, including complaints from well-established cab groups nationwide, safety concerns and plain old skepticism at the introduction of an arguably newer and better mousetrap.

While those issues have made headlines, a lesser know issue has been lurking; Insurance coverage.

Is your Uber driver covered?

Is your Uber driver covered?

In his blog post “The Insurance Secret Uber Doesn’t Want You to Know“, Adam Cecil says:
“Consider this insurance horror story:

Someone pulls up an app on their phone, types in the address of where they need to go, and orders your car. You turn around and drive to pick them up.

While you’re driving, you look over to your phone to make sure you’re still heading in the right direction. While you’re looking the other way, you hit a car. It’s not a big accident (luckily), but it’s bad enough that the other driver calls the police (and you have to cancel your pick-up).

The police get there, they take down all of your info, including the fact that you were driving for a company called “Uber.” You submit your claim to your auto insurance company and go about your life.

A few days later, your insurance company calls you. Unfortunately, your claim has been denied because you were performing a business activity. You’re now on the hook not only for your own car repairs, but the other driver’s, too. Oh, and by the way: your car insurance policy has been canceled.

You contact Uber to see if their insurance policy is going to cover the damages. Nope, says the woman on the other end of the phone. Since you didn’t have a passenger in the car, they’re not liable. Consider yourself lucky you didn’t hurt anyone.

auto crashes

You can see from just this brief excerpt that both Uber drivers and passengers straddle several areas while participating in the sometimes-called “ride share” program, making coverage for this new industry murky to say the least.

Companies like Uber and Lyft, on their end, maintain that they are not transportation services despite hiring drivers (with little or no screening), connecting drivers with clients, and performing many other tasks we would associate with a taxi service in an attempt to sidestep some of the expensive liabilities associated with the transportation for hire industries.

To fill this gap, a few states have introduced insurance products, as shown in the graphic below.

In those states, companies like Geico have stepped up to offer products to cover this for as little as $6-$8 a month.

Unfortunately, for those of us living in New England, there are currently no available insurance products that will cover these situations. As both a driver and a rider, you are better off using traditional livery, or car-for-hire services unless and until there is insurance coverage.
While that may be less convenient at the moment, companies across the country are working to develop products to cover you and you can count on Penny Hanley and Howley to be there, letting you know what is available, and when!

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