October 9, 2015

Don’t be a dummy at your next dinner party: know the ins and outs of the UberX debate

Over the past few months, UberX has been making news headlines and there has been much discussion throughout Canadian cities and their municipal laws, allowing it to operate legally.

Last week, Toronto decided to outlaw UberX, and a recent polling of citizens in six major Canadian cities has indicated that Londoners were most hostile to Uber, with nearly half wanting it banned and only 23% supporting the ride sharing service’s continued operations. UberX is new in London; having launched in July, which explains why only 37% of respondents have been following the Uber-taxi issue.

With all of this animosity toward and mixed messaging surrounding UberX there is also a large group who favour the new ride sharing service and many people who would like to jump on board by becoming UberX drivers. It’s a great way to make extra cash, but please know there are dangers to this decision as well.

Uber operates a number of brands under their technology platform that connect paying passengers to transportation options. There are currently five: Uber Taxi, Uber Black, Uber SUV and Uber Lux, all appropriately insured. UberX (Uber’s low-cost model) pairs passengers with independent drivers who use their own vehicles for transportation, and isn’t covered correctly under a private passenger policy in Ontario.

Insurers have specified they’ll void policies when drivers are found driving for UberX as there’s a coverage exclusion when vehicles are used as a taxicab, bus, a sightseeing conveyance or to carry paying passengers. Currently in Ontario, the only option to ensure adequate coverage for UberX drivers is a Facility Policy issued with taxi rates (Class 77) and an added 6A endorsement.

Uber’s been around only five years but projects a valuation of $50 billion by the end of 2015. As of May, the service was available in 58 countries and operated in 300 cities internationally; in Ontario, UberX operates in Hamilton, Burlington, Kitchener, Waterloo, Guelph, London, Toronto/GTA and Ottawa.

Uber’s been surrounded by controversy from the beginning – its success has had great impact on the market share of taxi services. Among others, California, British Columbia, Seattle and Washington have raised regulatory and legal issues that include trying to limit the number of cars in operation.

On the other side, the Ontario Chamber of Commerce recently released a report urging government to view the sharing economy as an opportunity, asking them to develop new approaches to regulation that keep only necessary and relevant provisions.

In short, there are major insurance gaps that exist for both drivers and passengers. Insurers need to develop and educate brokers on new coverage solutions, and as your broker, we need to communicate the risks to you. We need to not only guide awareness, but lead it. We understand that ride sharing is the future, and at some point proper coverage will become available. The closest we have come to a solution so far is Intact’s partnership with Uber for Canada’s first ride sharing insurance policy but until that plan is made or more insurance companies can offer solutions, using your vehicle as a ride sharing service gives your insurance company cause to void coverage should you be in an accident.

As always, your local broker is available to discuss your insurance options. In the meantime, keep your eyes on the headlines and look for more updates from us!