The 2016 Entrepreneur (Part III): Protection In The Sharing Economy

Uberby Charlie Schein
Star Schein Insurance

Everyone is looking to save or make an extra buck!  That’s ok…after all, who couldn’t use a few extra dollars in the holiday/vacation or weekly grocery fund?  People are turning towards web enabled 3rd party apps to turn their vehicles in to taxis and homes in to an instant Bed and Breakfast.  All this can be done quickly, easily and cheaply using the internet!  Or can it?

As an insurance agent, I have concerns.  Not that I mind anyone making extra money…my concern is that personal auto and home owners policies are just that…personal.  Each contain exclusions for commercial enterprises.  When you open your home and car to commercial risk, the insurance company has the right to decline to pay any claims arising from these activities because you misrepresented how you will use your house or car when you submitted the application for coverage.

I was curious about Uber and AirBnB and went to both sites to do a little research.

Let’s tackle Uber… www.uber.com

There are several “flavors” to Uber…from their website

Uber X: The least expensive service-the vehicles must be 2000 or newer.

UberXL: Seats at least 6 passengers.  An UberXL car will be an SUV or minivan. It’s a higher fare than UberX.

Uberselect-a luxury sedan that seats up to 4 passengers.

UberBlack-This is a licensed commercial registered and insured livery vehicle. (Expect the highest fare)

For this discussion-we will be talking about UberX-

First off I would like to reiterate that your personal auto policy is not designed to handle a commercial risk. If you insist on not purchasing commercial insurance and obtaining a commercial driver’s license (CDL) and carrying passengers for a fee, you run the risk of your insurance company dropping your coverage.

That being said this link: blog.uber.com/ridesharinginsurance  will lead you to the details for Uber X’s liability insurance.  On the face of it…it seems ok.  Based on the Uber X website, it seems that while you are on the way to pick up a fare and delivering your fare the driver has coverage of $1M for bodily Injury and an equal amount for Uninsured/Underinsured liability.  They also appear to offer coverage for comprehensive and collision up to actual cash value (replacement cost less depreciation + wear + tear) with a $1000 deductible.  While you are waiting for a fare you have coverage of 50,000 per person/$100000 per accident and $25000 property damage liability.  Per their website-this coverage appears to be primary.  That means that they pay first if an incident occurs while you are in the process of carrying a passenger as their “contractor”.

If you choose to drive with Uber or any of the similar companies, you are putting yourself and your vehicle at increased risk.  Be careful and make sure you read the agreements carefully or better yet-invest in having an attorney review the documents you need to agree to prior to signing and sending back.

Small disclaimer, I am not (to my knowledge) currently insuring anyone who drives for Uber and have not had to process or deal with any claims from my clients who have driven for Uber. So while it looks like the coverage they include may work and provide adequate protection, it’s tough to say for sure until there is an incident to that proves their coverage will perform as stated by them.  Another item to note is that if you are at fault in an accident, no matter which company pays for it, this incident will appear on a CLUE (Comprehensive Loss Underwriting Exchange) report.  CLUE is an information clearing house that simply reports the facts…(ie this person had an accident and their insurance company paid out X dollars.)  Insurance points follow drivers-so even if the accident is paid for by Uber’s insurance carrier-the accident surcharge will follow you to your personal auto policy.

As with anything that looks too good or too easy, always beware and read the fine print!