In response to the rapidly growing and somewhat controversial rise of ridesharing programs, Uber and Intact Financial Corp have announced plans to develop a new insurance product that protects drivers who use their own personal vehicles for ridesharing programs.
The organizations said they are in the process of working with provincial governments in the provinces that currently have ridesharing programs (Ontario, Alberta and Quebec) to develop an insurance product that is nationally consistent but customized to each province's regulations.
What exactly is ridesharing?
Ridesharing is a new industry that connects drivers who use their own personal vehicles with passengers looking for rides through geo-based apps such as Uber. It's part of what's called the sharing economy, a peer-to-peer network that is expected to grow from $25 billion to $335 billion by 2025.
The insurance grey area
Ridesharing programs such as Uber are growing in popularity, but they introduced a slew of challenges for insurers, drivers and passengers alike.
On the one hand, Uber provides its UberX drivers with $5,000,000 commercial auto liability insurance that covers bodily injury and property damage. On the other hand, drivers are jeopardizing their own personal auto insurance coverage by using their vehicle for commercial purposes, which could result in many Uber drivers not being properly insured.
Drivers who use their own vehicles as essentially a taxi service are not covered under their personal auto insurance policies. If you are an Uber driver and you get in an accident your insurance could be void-especially in the event of non-disclosure. If your insurance is not void, you may lack sufficient coverage. Most insurers recommend a minimum of $2 million liability.
Provinces like Ontario operate on a no-fault system, which means regardless of who is at fault in a collision each driver must go through their own provider. Where Uber's commercial policy comes into play in this matter remains unclear.
Insuring the sharing economy
Intact has been working with Uber's Canadian insurance broker AON Reed Stenhouse to develop the rideshare insurance product. The details of this product are not currently available.
Intact intends to offer the products through Intact Insurance, Novex Insurance and belairdirect. It's expected that the Intact offering will benefit UberX, UberXL and UberSelect drivers when available.
This is just the beginning as Intact notes it may develop related products for the sharing economy-such as insurance for airbnb-down the line. Kanetix.ca will keep you posted as more information regarding rideshare insurance becomes available.
In the meantime, if you are an Uber driver or interested in becoming an Uber driver, speak with your auto insurance representative to get their advice on the right coverage for your situation.