The recent popularity of UberX and other ride-sharing apps has raised a number of questions about insurance coverage for Ontario drivers and passengers.
UberX is a smartphone app which matches potential passengers to drivers in their area. UberX collects a percentage of the fare charged to a passenger’s credit card through the app and the driver keeps the remainder.
Drivers who sign up with UberX are required to have a drivers’ license, a car, and proof of insurance. After signing a contract with the company, they access the app which alerts them to the presence of nearby passengers.
In Ontario, insurance coverage for UberX drivers is a concern given the wording of the standard Ontario Automobile Policy which –except for some accident benefits– excludes coverage for vehicles used as taxicabs or to carry paying passengers. The standard Ontario Automobile Policy also requires drivers with existing insurance policies to notify their insurer of any material change in risk. Failure to do so can result in an insurer voiding coverage under the policy.
What this means for UberX drivers is that their policy can be voided if it is discovered that they have been transporting paying passengers without telling their insurance company. A driver who misrepresents themselves to their insurer can face additional sanctions under the Insurance Act such as fines or criminal charges related to allegations of fraud.
If an accident occurs, drivers and passengers can be restricted in the amount of benefits and compensation they are able to receive for their injuries.
Uber Canada representatives have stated that UberX rides are backed by an additional $5 million dollar commercial insurance policy. However, recent court proceedings with the City of Toronto have revealed that Uber Canada’s policy provides coverage to the corporation which does not extend to UberX drivers or passengers. The company is currently working with Intact Financial to develop insurance products that can cover drivers who use their personal vehicles for hire.
The Financial Services Commission of Ontario (FSCO) recommends that UberX drivers check with their auto insurance representative about having proper insurance in place to protect themselves, their passengers, and others in the event of an accident. It is likely their insurers would tell them they are not covered unless they have a commercial insurance policy.
FSCO also recommends that passengers ask their driver about their insurance coverage and obtain independent legal advice from a car accident lawyer before using UberX and other ride sharing apps.