American insurance company Geico announced in February that it will now be offering a specialized insurance product that covers ride-sharing services like Uber and Lyft in Virginia.
"We have spent a lot of time understanding the needs of ridesharing drivers," said Othello Powell, director of GEICO commercial lines, in a statement.
"What we developed is a hassle-free product that covers both personal use and ridesharing use,” he said. “The insurance applies whether or not the app is on and whether or not you have a passenger. The coverage is also not limited to just one transportation network company.”
The move comes in the midst of a drawn-out battle between Canadian cities and ridesharing companies over the legality of the services, as normal taxi drivers need a license to operate.
In late November 2014, the city of Toronto filed an injunction against Uber, claiming it has been operating as an unlicensed taxi brokerage; however, Uber’s standard defense is that it’s merely a technology company, and it therefore shouldn’t have to conform to licensing or regulatory standards.
The problem is that traditional cabs pay about $10,000 a year for their permit and commercial insurance, whereas the Uber drivers pay nothing more than their personal insurance policy.
Despite Uber ensuring drivers and passengers that they’re covered under a $5 million liability policy, the Insurance Bureau of Canada (IBC) says it might not be enough.
Pete Karageorgos, director of consumer and industry relations for the IBC, told the Toronto Star that if an Uber driver has an accident without a commercial insurance policy, “then there’s likely going to be some challenges.”
However, the problem is the demand for taxis in Canadian cities far outweighs the supply: Toronto has a rate of about 18 cabs per 10,000 people, compared to rates like 116 per 10,000 for Washington, D.C. and 63 in New York City.
Despite the backlash from Canadian cities, Uber is bridging this gap; and now, insurance companies are adapting as well. It’s likely we’ll see similar moves from Canadian companies in the coming years.