Questions remain about ride-sharing auto insurance

Published: November 24, 2017

Updated: July 24, 2018

Author: Luke Jones

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While ride-sharing companies like Uber and Lyft are legal in many parts of Canada, with auto insurance frameworks in place, there remains much debate about how insurance can be properly implemented. For example, verifying the hours a driver works for a ride-sharing service can be difficult, one adjuster claims.

“In the course of their investigation, an adjuster can ask, ‘How many hours a week have you used your vehicle for ridesharing?’” said Marie Gallagher, branch manager with Kernaghan Adjusters in St. Catharines, Ont. In an interview with Canadian Underwriter “But in reality, how can this number actually be verified?

“What if they typically use it 10 hours a week, but, every once in a while, 25? Or 30? An underwriter would never know.”

Gallagher is also concerned that it is hard to assess where the vehicles is being used, making assessing risk problematic. “An insured may primarily use their vehicle in a suburb and be rated accordingly, but what if they are driving the people in those suburbs to the airport on Series 400 highways each week?” Gallagher questioned. “Greater exposure equals greater risk.”

Lyft has recently announced its will expand outside the United States for the first time by launching in Toronto before the end of the year. Experts have already questioned whether the company has an auto insurance network in place, like Uber has. However, Gallagher says there will be little difference in terms of adjustment for the two companies.

For both ride-sharing giants, adjusters will need to assess:

  • what the vehicle was being used for at the time of the loss
  • the location to and from which the vehicle is driven, and
  • the identity of any passengers.

“Transporting paying passengers opens drivers up to all kinds of liability issues, costs and claims,” she said. “The financial risk to a driver in not taking out additional insurance or concealing that the vehicle is being used for ridesharing far outweighs any potential ridesharing revenue. As such, I think there is going to be an onus on a broker or direct writer to clearly note on the application of insurance that such things (use of vehicle) have been explained in detail to the insured in order to protect the broker in future.”