INSURANCE ISSUES
Uber system may have gaps
Uber may have been a breech birth — feet first, head last — but it’s definitely moving mainstream — finally bending to all those silly laws it was so intent on breaking.
Many of those laws have had to do some gymnastics to reflect that people — ride-share users and providers — were going to do it anyway. Many call it an uprising; I still call it a company that broke rules and endangered customers and drivers alike, and I’ll never use them.
Two things happened: I started noticing advertising for Uber drivers on TV, and then it was announced that, finally, all Ontario and Alberta Uber riders would be covered by insurance.
First, the ads. I heard a wistful man’s voice listing the reasons for using an unnamed product, finally telling you to be an Uber driver to make all your economic dreams come true. Uber has also said back in 2014 it intends to replace drivers with automated cars, so I think it left a critical line out of its warm and fuzzy message: Come work for us until we don’t need you anymore.
In April, Arianna Huffington, of the Huffington Post, joined the Uber board. She doesn’t pay her writers, so I found the irony a bit rich that she’ll be helping a company that ultimately wants to not have to pay its drivers.
Uber started out running roughshod over the cab industry by undercutting fares and flooding the market with “drivers.” Uber “drivers” only had to prove they had a newish car and were willing to work stupid hours. The appeal to users was simple: a handy phone app brought a ride to you fast, and in most instances it was cheaper. Throw in Uber drivers who became chauffeurs with elegant manners, and riders were smitten.
The truth was crappier. Uber’s promised average wages were not borne out; drivers, once in, started experiencing death by a thousand cuts. Needing to preserve a perfect five-star rating (users report their experience) is a noble aim, but one person’s friendly banter is another’s intrusive chatter. The company’s goal to please its users came at a cost to its drivers.
While taxi drivers and companies staged strikes in many centres against the Uber “invasion,” I never saw the battle that way. The cab industry has long needed cleaning up; laws surrounding it are antiquated and struggled to cope with the new technology that made Uber so popular.
I have no stink with the business model, only the way it was introduced.
The biggest issue has always been insurance. It wasn’t until two months ago that an insurance product even existed in Canada — with Aviva — that could provide Uber drivers with the coverage they need to use their cars to earn income. Previously, standard policies did not stretch to become commercial ones without rates that were many times normal annual fees. Drivers skirted the issue by failing to inform their insurance providers they were now acting as a livery service — basically voiding their policies.
Uber did that whistling and looking sideways thing because hey, it had dotted the “i”s and crossed the “t”s in its fine print to pretend its own insurance covered its drivers. It didn’t. Cowards. Until now. Uber has finally, in Alberta and Ontario, secured a policy with Intact Financial Corporation (IFC) that protects riders and drivers from the moment a ride is arranged until it is completed. Awesome, right? Well, hold up. While drivers still must notify their personal car insurance companies they are driving for Uber, the work portion of their car usage is now covered under the Uber/Intact policy. The devil is in the details.
From Sound Insurance broker Debbie Arnold: “The edict from Intact is that if the client is insured outside of the Intact family (Belair, Novex, Jevco), they must advise their personal automobile insurer that the vehicle is used for Uber, and Intact is picking up the usage as soon as the driver accesses the Uber app.” Since this is new to the industry, she says, we don’t know how the courts will react in the event of a serious claim. Intact says the liability limit is $2 million once the passenger is picked up, the deductible is $1,000 (if they purchased physical damage coverage on their personal policy, and if on that personal policy the deductible is $500, the driver is on the hook for the $500 deductible difference). But they are only providing standard accident benefit coverage (so if the driver purchased maximum buy-ups for med/rehab and attendant care, that additional coverage will only apply when the vehicle is used for personal purposes, not while driving for Uber). “There are going to be gaps in coverage here even when drivers inform their personal carrier, because there are loopholes,” Arnold adds.
As municipalities struggled with a service their voters loved but their entrenched businesses despised, Uber flounced around, not caring. Drivers raced to make money free of all those silly things like regulations and insurance and taxes and oversight. Insurance companies knew two things: an increasing number of drivers and passengers weren’t covered, and they were missing out on a chance to make money.
The short take-away? This is great news for consumers. It’s good for drivers who understand the limitations of the improvement that keeps citizens protected, but the cost of this will come from somewhere. I’m guessing it’s not Uber’s cashmere-lined pockets or those riders they want to keep bribing with undercut pricing.
Yup. It’s the drivers who will bear this. Until, of course, there are no drivers at all.