Why Uber’s new between fare insurance won’t work in Canada

One of the biggest criticisms plaguing Uber is that of driver insurance. The company has long maintained that its insurance policy covers drivers, but the periods during which Uber’s insurance covers drivers is unclear.

For example, the company has previously refused to cover drivers for accidents that occur between pick ups. They must go through their own insurance for these incidents. The problem arises if the driver’s own insurance company also refuses coverage because they were technically engaged in commercial activity. Engadget reports that Uber now offers injury liability for victims outside the car during accidents that occur between fares but only if the driver’s own insurance won’t pay and only up to $50,000.

The Insurance Bureau of Canada has warned Canadians about Uber and the UberX program and what it could mean for them from an insurance standpoint, but south of the border, Uber is attempting to beef up driver insurance through a new partnership with Metromile.

In case you’re not aware (and you can hardly be blamed, as the company itself is very new), Metromile is a per-mile insurance company that only charges drivers for insurance on the miles that they drive. Miles are tracked using an OBD-II adapter that is compatible with any car built after 1996.

This new partnership with Uber will see drivers only pay for insurance on personal miles. Metromile syncs up with Uber to distinguish when a driver is working and therefore covered by Uber’s insurance. This is mostly for people who don’t drive much outside of their Uber job and eliminates the need for personal insurance when driving with Uber (a requirement from the company).

The main issue is that Metromile is only offering this type of coverage in three states in the U.S. (California, Illinois and Washington) and so this isn’t a solution for everyone, just the drivers in those cities. Chances are this service won’t be available in Canada anytime soon — it’s not even available to all of the Uber drivers in the United States. The Insurance Bureau of Canada says that as far as it’s aware, this specific type of usage-based insurance coverage is not available in Canada through anyone else either.

Therein lies the rub with Uber’s business in general. With so many different federal and provincial laws to contend with, the company is constantly fighting new battles in every city and country to which it expands. There is no one size fits all approach, which makes consistent policy difficult from any perspective, be it that of Uber, the government, the taxi and insurance industries, or the consumer.

Therein lies the rub with Uber’s business in general.

Here in Canada, Uber is only available in a handful of cities (the likes of Calgary and Vancouver have shut Uber out) and insurance is also a major concern. In November, The Globe and Mail published a story about the City of Toronto’s investigation into Uber and its entire process for screening drivers. While at the Uber offices in Toronto, the City’s undercover private investigator overheard an Uber rep speaking to a driver about an incident that had occurred while the driver was carrying a fare. The Uber employee told the driver to through his own insurance, and when queried on the issue of Uber insurance by the PI, said Uber’s insurance would cover anything that the driver’s insurance provider would not.

Perhaps most alarmingly, when the City’s investigator requested a copy of the Uber insurance policy (a reasonable request if you signing up to do business with Uber), the company was unable to provide one.

Uber is hoping to re-enter Vancouver in the near future, and no doubt the company plans to expand to other cities in Canada down the road. However, when you hear stories like the one presented by The Globe and Mail, it’s easy to understand why the company so often runs into problems when it reaches new territories.

We spoke to The Insurance Bureau of Canada about this situation to try to get a better idea of the situation above might play out if a driver were to try and file the incident under their own insurance. The answer was pretty clear. Pete Karageorgos, Director, Consumer and Industry Relations for IBC, said that while the Bureau doesn’t like to tell people what they should or shouldn’t do, the only way an insurance company would pay out a claim like this is if the driver has his or her own commercial insurance coverage. One of the first questions the person would be asked by their insurance company would be who was in the car and how they knew that person. If the claimant revealed that it was someone they were transporting in exchange for payment, it wouldn’t be covered.

Over all, the Insurance Bureau of Canada line on the matter hasn’t changed much from the last time it spoke out on this issue: If you’re going to start driving for any ride share program, you need to check with your insurance provider if what you’re doing will mean a change in your policy. This is a problem that existed long before Uber or any other ride share program launched. If you buy a new car, if you modify your car, if your son or daughter or husband or wife gets their license, your insurance company has to know, even if they’re not going to be driving your car.

Really, what is needed is specific laws and coverage relating to rideshares. As it stands, things are very black and white. Your vehicle is either used for commercial use or it isn’t. Pete Karageorgos explained to us that because insurance is regulated at a government level, any application for insurance will start with a questionnaire that becomes part of your policy, part of your contract with the insurance company. This list of questions includes your age, the type of car you drive, how often your drive, if you carpool, and if you use your car for work. If you answer ‘yes’ to that last question and you drive for Uber, your coverage can’t be guaranteed.

We reached out to Uber Toronto for comment on the claims made in The Globe and Mail as well as clarification on how its insurance covers drivers (and whether drivers are encouraged to first make claims on their own insurance instead of Uber’s) but have yet to receive any response.

[source]Engadget, Metromile, Globe and Mail, MobileSyrup[/source]