Uber and Other Rideshare Apps – How Should They Be Insured?
They’ve revolutionised public transport in cities across the UK. But what’s the right way for tap-and-go taxi apps to approach insurance?
Cashless ‘rideshare’ apps such as Uber have overhauled the way city-dwellers use public transport. The San Francisco-based firm started a tap-and-go revolution with its carshare service, which went international in 2014 and currently operates in 518 cities worldwide.
Uber customers use the app to request a journey, which is accepted by a nearby driver using location technology to pinpoint both the user and their destination.
Alternative apps such as Karhoo, Hailo and Gett work slightly differently, either hailing nearby Hackney Carriages or public hire taxis by app, or comparing prices of local private car and minicab companies. Rival rideshare app Lyft operates on a similar concept to Uber and is available in the US and other international cities, but is yet to appear in the UK.
Whilst the concept sounds like a private hire taxi service, they don’t use that terminology. Drivers use their own cars and are screened on application, with their licences, registration and proof of insurance check. In the UK, Uber requires them to have a private hire licence. Uber calls them ‘independent contractors’, which means that the company does not oversee the drivers or the condition of their cars.
In terms of insurance, where does this leave Uber drivers? One thing’s for sure, it’s the drivers’ responsibility to arrange correct insurance.
If you want to sign up and drive for an app, your existing policy is probably not rideshare friendly. When driving with a paying passenger in the car, the vehicle could be classed as a taxi or at least in business use, but personal cover might also be needed for using the car between pick-ups to avoid not being covered for any incidents which occur without a passenger in the car, and vice versa.
If an insurer views these apps as a traditional taxi service, then a driver working using the app would need taxi insurance – long-existing policies designed for private and public hire taxis which take cabbies’ higher mileage and an increased likelihood of risks into account. But these policies often do not cover rideshare apps, which do not directly employ their drivers.
As this kind of app proves it isn’t going anywhere fast, specialist insurance policies are now starting to emerge written just for drivers working in this new kind of service. Private hire insurance with hire and reward, perhaps supplemented by public liability cover, is a typical example of the kind of policy which might work well in this situation.
So what about passengers? The app is a totally cashless service and features safety features such as sharing your ETA, a star rating system and a rapid response team for emergencies. But are you insured as a passenger? If you were injured in a bump whilst riding in an Uber, it’s the drivers’ insurance you’d need to claim on, since it is not Uber that insures the car. Uber also offer a help and support messaging facility on their app.
With this tech-led type of transportation service proving it’s here to stay, look out for the insurance market developing new products to keep up.