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4 Surprising Things Every Uber Driver Needs to Know About Insurance Liability

Although rideshare services like Uber are rather new, business is booming. Uber alone facilitates an average of 1 million trips per day.

Think about that for a second. That’s a lot of Uber trips! With riders taking so many trips every day it is an unfortunate reality that there will be accidents.

What happens in the case of an accident involving an Uber vehicle? Who pays for what? Which insurance company is responsible? Who decides in cases that fall outside the parameters the law has established?

It’s not as cut and dry as accidents involving taxicabs or private vehicles. Since the private vehicle is being used to earn money, the rules aren’t the same. But neither does it fall under the same rules for taxi cabs as for-hire vehicles.

Do You Want to Be an Uber Driver?

Rideshare services are a fairly recent venture. Travis Kalanick and Garrett Camp founded Uber a short 8 years ago in 2009. Business is booming and the company now has 40 million active users.

With so many people looking for rides, Uber offers drivers a great option for making some extra cash. Drive people around, get paid. Sounds simple enough. Unfortunately, contrary to how Uber makes it sound, it isn’t all as simple as that.

Read these 4 surprising things every Uber driver needs to know about insurance liability. Once you pick up your first customer, you’re exposing yourself to potential risks. Know this information beforehand to make sure you protect yourself correctly.

Rideshare Insurance is Hazy

Because of the idea’s newness, the laws surrounding rideshare insurance are still hazy. Uber vehicles are not taxis and therefore are not subject to the same rules and regulations.

 

So what are they subject to?

It’s not yet crystal clear. That’s why, as an Uber driver, you should ensure that you understand the risks and cover yourself. You should also know of a good attorney, such as the folks at Zanes Law, in case you need them.

In most cases the insurance that Uber carries to cover its drivers is adequate. But not in all cases. Find out what rules are in effect in your area and what steps you can take to protect yourself.

It also depends on who is at fault for the accident. In most cases, if another driver hits you, their insurance company gets to pay for everything. That’s the same as if you were driving on your own.

But we all know even that can be hazy. What happens if the other driver doesn’t have insurance? What if it’s not clear who is at fault? What about a hit and run?

Eventually, rideshare rules and regulations will get worked out. But for now, things are still a bit hazy.

Your Insurance May Not Cover You as an Uber Driver

Most people probably assume that if they get in an accident in their own vehicle their insurance will always cover them. That’s not always true.

If you are using your vehicle for business purposes or to earn money, things can get sticky. The point of personal insurance policies is to cover private individuals in their personal vehicles.

When companies provide vehicles to their employees, they have to provide insurance also. Uber’s policies are different in that they don’t give their employees a vehicle.

That doesn’t change how your car insurance company works, though. If you are in an accident with a paying passenger in the car, there’s a good chance your car insurance company will refuse the claim.

The Company’s Insurance May Not Cover You

To ensure that their drivers and passengers have enough coverage, Uber provides insurance. With this extra coverage, you might think that you don’t have to worry about a thing.

But, Uber’s insurance is only active when you have a passenger in the car. That works, right? Private insurance covers you when you’re alone. Uber covers you when you’ve got a passenger.

There’s one area that still remains unclear. What if you are on your way to pick up a passenger? Or on your way back from dropping one off? The trip still technically counts as a business trip. The reason for this is that you wouldn’t be driving if it weren’t for the business.

In this case, many Uber drivers lie and say they were using their vehicle for private purposes. That way their personal insurance will cover the accident. All better, right?

Wrong.

It is common practice for insurance companies to give a discount to drivers with no claims. Because of this if you choose to use your personal insurance your premium will probably go up. You’ll have to pay a higher rate for insurance thanks to an accident that happened on company time.

Not the ideal situation.

You Could Get Stuck With the Bill

Most states require rideshare companies to provide primary insurance coverage for their drivers. This only applies when the drivers are working and is not true everywhere. If you are looking to be an Uber driver, we recommend that you know the law in your area. This is especially true outside the United States.

In some cases, the company insurance won’t cover the accident. If the accident was your fault, the burden falls to your private insurance. You’re responsible for any injuries the passenger(s) in your vehicle sustain. You’re also responsible for any other vehicles and passengers that you damage.

If your insurance company refuses the claim, you might get stuck with the bill. With the cost of medical care and car repair these days that bill could be astronomical!

To avoid this, be upfront with your insurance company. Tell them you are planning to become an Uber driver and find out what kind of policy is right for you. Yes, you will probably have to pay more for your insurance. But can you really put a price on the peace of mind it will provide?

Also factor in your personal risk. Spending more time in a vehicle increases your chances of getting hurt or killed in an accident. Looking for less dangerous ideas to make money outside of your 9-to-5 job? Check out our course 10 Paths To Freedom: How Can I Work For Myself?

If you’re interested in seeing what other skills you can sharpen and capitalize upon, please contact us. We have a wide variety of resources to help you reach your potential.