The Real Deal on UberX
Last week we hosted a webinar, Understanding UberX & How You Can Protect Consumers. Along with our contributors RSA Canada, Jones LLP, Mitchell & Whale and James W Kloepfer Insurance Brokers, we presented our findings to over 850 members (our largest, most successful webinar yet).
In short, there are major insurance gaps that exist for both drivers and passengers. Insurers need to develop and educate brokers on new coverage solutions, and brokers need to communicate the risks to their clients.
Uber operates a number of brands under their technology platform that connect paying passengers to transportation options. There are currently five: Uber Taxi, Uber Black, Uber SUV and Uber Lux, all appropriately insured. UberX (Uber’s low-cost model) pairs passengers with independent drivers who use their own vehicles for transportation, and isn’t covered correctly under a private passenger policy in Ontario. Insurers have specified they’ll void policies when drivers are found driving for UberX – as stated in the Standard Ontario Automobile Policy (O.A.P.1) Section 1.8, there’s a coverage exclusion when vehicles are used as a taxicab, bus, a sightseeing conveyance or to carry paying passengers. Currently in Ontario, the only option to ensure adequate coverage for UberX drivers is a Facility Policy issued with taxi rates (Class 77) and an added 6A endorsement (although Intact has expressed interest in exploring new coverage).
It’s been interesting to watch the rise of ridesharing programs given our mandate of safeguarding the broker channel and protecting Ontario consumers. For us, driving awareness is key.
Uber’s been around only five years but projects a valuation of $50 billion by the end of 2015. As of May, the service was available in 58 countries and operated in 300 cities internationally; in Ontario, UberX operates in Hamilton, Burlington, Kitchener, Waterloo, Guelph, London, Toronto/GTA and Ottawa.
Uber’s been surrounded by controversy from the beginning – its success has had great impact on the market share of taxi services. Among others, California, British Columbia, Seattle and Washington have raised regulatory and legal issues that include trying to limit the number of cars in operation. Toronto taxi drivers filed a $400 million lawsuit against Uber in July, and the City of Toronto attempted to shut the service down entirely but Ontario Courts ruled against it, stating no evidence of Uber operating as a taxi broker.
On the other side, the Ontario Chamber of Commerce recently released a report urging government to view the sharing economy as an opportunity, asking them to develop new approaches to regulation that keep only necessary and relevant provisions.
As brokers, we need to not only guide awareness, but lead it. At every opportunity, ask whether vehicles are being used to carry passengers for compensation. If the answer is yes, clarify whether it’s for carpooling (carrying acquaintances to/from work for compensation while insured drivers are on their way to/from work) or ridesharing (using personal vehicles for prearranged, paid transportation). If this question isn’t asked, there could be E&O exposure on your end.
Ridesharing is the future, and at some point proper coverage will become available. See the opportunity in the situation. By supporting innovation, we’re more likely to grow alongside the new technologies being developed every day. If consumers aren’t aware of insurance gaps, risks and limits, help them understand they’re not fully protected in the event of a collision.
Those looking for more info – we have a free webcast of last week’s webinar, available shortly. In the meantime, we’ve posted an info sheet, speaking notes and our official comments on UberX under the Position Paper section of our website. We also encourage you to reach out with any questions or concerns you might have.