Are Uber Drivers Properly Insured?

July 16th, 2015 by

By Jeffrey Spiegel

Since its inception over 6 years ago, ride-sharing service Uber has continued to make headlines as one of the most controversial technology companies of the mobile era.  This “uber-convenient” service, which uses an online app to connect passengers with drivers using their personal vehicles, has faced legal challenges from consumer groups, municipalities, and provincial legislators.  In the face of these obstacles, Uber has continued its expansion to more than 300 cities, and is now valued in excess of $40-billion (US).

The Uber app allows customers to order rides on their smartphones, have them automatically billed to their credit cards, and monitor who is picking them up.

One of the controversial issues that Uber faces is properly insuring its drivers. In Ontario, the standard automobile policy excludes coverage when the automobile is used to carry paying passengers or used as a taxi.  Earlier this year, the Financial Services Commission of Ontario (FSCO), which regulates provincially-incorporated property and casualty insurance companies, warned drivers and users of the ride-sharing services that they may not be protected against certain damages, losses, and liabilities that may arise out of use of the service.

While Uber drivers should be opting for a more expensive commercial license, most do not, and instead, continue operating under their existing personal auto insurance policies.  Under these policies, if an Uber driver were to get into a serious accident while driving for the ride-sharing company, insurers would likely limit the amount they pay out in claims.  In addition, they would then go after the driver for the money for violating the terms of their personal policy.

Uber has responded to these insurance concerns by providing contingent insurance to cover drivers in case they encounter problems, however, the company has been tight-lipped on the exact terms of the policy that operates in Canadian cities. Uber ensures this policy covers everyone during a fare, but there is uncertainty about coverage before and after and even during the ride.  Without the details of the policy, it is impossible to know whether it provides adequate insurance for drivers and users.

In the face of these insurance complications, The City of Toronto has taken steps to interfere with Uber’s operations.  Last November, the City filed an injunction to shut down Uber’s ride-sharing application.  According to a recent article in the Globe and Mail, The City of Toronto is claiming that Uber’s service violates municipal taxi licensing regulations—failing to meet the $2-million coverage that is required to operate under city bylaws. However, Uber’s website maintains that it provides $5-million in insurance coverage for users.

In March, a judge ruled that if the company chooses to provide a copy of its insurance policy as evidence, the document must be made public. Uber has argued that the document is a “trade secret” and that making it public “would cause serious harm to its commercial interests and competitive position.”  But Justice James Diamond of the Superior Court disagreed with this, stating in his ruling, “I am not satisfied that Uber has presented sufficient evidence to show that disclosure of the insurance policy would lead to a loss of any competitive advantage.”

This week, the Superior Court of Ontario put the issue surrounding Uber’s operations to rest for the time being, dismissing the city’s application for an injunction. In his decision, Justice Sean Dunphy concluded that there is “no evidence” Uber is operating as a taxi broker, and therefore not subject to city bylaws regulating taxis.  As a result, Uber will continue its operations in Toronto.

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