Insurance: Taxi commercial compared to Uber time-phased
Attempt at a plain-language clarification of differences
On September 24, 2024, Taxi News wrote Economical Insurance, which insures Uber in Ontario. The information request was in an attempt to obtain plain-language clarification of the differences between the commercial insurance policy required by Taxi operators and the time-phased insurance product for which Uber pays Economical.
Sarah Attwell, Vice President of Corporate Communications for Definity (Economical’s parent company) replied by email and worked with Taxi News to help finalize a fact-checked version of the questions which were submitted in chart form. The text provided by Sarah and her team on October 10th is the third column of the chart below, and is being presented word-for-word identically as it was provided.
Additionally, Senior Manager of External Communications Mathieu Genest returned from travelling on October 21st and provided additional, clarifying information through two lengthy telephone discussions.
Perhaps the most surprising finding that resulted from this work is the realization that the insurance product which covers Uber drivers in Ontario is not purchased by thousands of individual Uber drivers based upon their driving record and experience. Rather, there is only one policy, and only one client, which is Uber corporately.
Neither Economical Insurance nor the City of Toronto keeps a record of the individual drivers covered by this policy. In contrast, every licensed Taxi owner files their own, vehicle-specific insurance pink slip with Toronto’s Licensing division.
The fact that Uber maintains the only existing list of the drivers insured by this policy is leading to a number of unanticipated impacts on drivers, which will be the focus of several upcoming news and opinion articles in Taxi News in the weeks ahead.
Please note: every effort has been made to ensure the accuracy of this information. However, given that this is what Mathieu Genest describes as “a novel insurance product developed for a novel ridesharing service,” misperceptions are possible. If you have a clarification to offer for the chart below, please email [email protected]
Illustration of Economical’s “Time Phased” coverage for Uber
Taxi commercial, Uber time-phased insurance comparison
| Text resulting from fact-checking by Taxi industry operators, managers and insurers | Text/question as sent by Taxi News to Economical for fact-checking | Economical’s fact-checked reply |
| Commercial Insurance for Taxi | “Wrap-around” or “time-phased” insurance for Uber | Economical Insurance for Uber |
| Is completely separate and independent from any personal coverage a driver may carry (i.e. on the vehicle they drive for personal use) | Is wrapped around[1] the driver’s personal auto policy | The commercial auto insurance policy issued by Economical provides coverage from the moment the driver makes themselves available to accept a ride in the Uber app to the moment the request is completed. When providing ridesharing, this coverage also helps protect passengers from the moment they are picked up to the moment they exit. When driving the vehicle for personal use, the driver relies on their own personal auto insurance policy. |
| Is in force 24 hours per day, 7 days per week | Is in force only during specific periods of a driver’s work for Uber. It is not in force outside those periods. | The commercial auto insurance policy issued by Economical provides coverage from the moment the driver makes themselves available to accept a ride in the Uber app to the moment the request is completed. When driving the vehicle for personal use, the driver relies on their own personal auto insurance policy. |
| Is in force 24 hours per day, 7 days per week, regardless of how the fare was arranged or how payment is made. | Does not provide coverage if driver picks up a cash-paying fare, off-app. | The commercial auto insurance policy issued by Economical provides coverage from the moment the driver makes themselves available to accept a ride in the Uber app to the moment the request is completed. When driving the vehicle for personal use, the driver relies on their own personal auto insurance policy. |
| If a Taxi driver strikes a pedestrian or another vehicle while they are driving around between fares, they are fully covered by their commercial insurance policy 24 hours per day, 7 days per week | If an Uber driver strikes a pedestrian or another vehicle while they are driving around between fares, the “wrap-around” policy is not in effect. | The commercial auto insurance policy issued by Economical provides coverage from the moment the driver makes themselves available to accept a ride in the Uber app to the moment the request is completed. When driving the vehicle for personal use, the driver relies on their own personal auto insurance policy. |
| By definition, commercial insurance providers for Taxi are aware before they extend coverage that they are covering a vehicle for hire transporting passengers for compensation. | Does not provide coverage if driver has not informed Economical[2] they are transporting passengers for compensation. | Drivers are responsible for informing their personal insurance broker or insurance provider that they are participating in ridesharing activities to ensure they have the personal car insurance they need before getting behind the wheel. Uber provides the commercial auto insurance for ridesharing drivers. Ridesharing companies are required by law to obtain this insurance. |
| Driver’s commercial insurance coverage is separate and distinct from any personal coverage a driver may carry (i.e. on the vehicle they drive for personal use). | Driver’s personal auto policy may get cancelled if they fail to inform Economical they are driving for Uber. Update: please see Footnote 2 | The commercial auto insurance policy issued by Economical provides coverage from the moment the driver makes themselves available to accept a ride in the Uber app to the moment the request is completed. When driving the vehicle for personal use, the driver relies on their own personal auto insurance policy. Drivers are responsible for informing their personal insurance broker or insurance provider that they are participating in ridesharing activities to ensure they have the personal car insurance they need before getting behind the wheel. |
| By definition, commercial insurance providers for Taxi are aware before they extend coverage that they are covering a vehicle for hire transporting passengers for compensation. | Economical may decline coverage in the event of an accident while driving for Uber if the driver has failed to inform Economical they are driving for Uber. Update: please see Footnote 2 | Drivers are responsible for informing their personal insurance broker or insurance provider that they are participating in ridesharing activities to ensure they have the personal car insurance they need before getting behind the wheel. Uber provides the commercial auto insurance for ridesharing drivers. |
| Commercial insurance coverage is separate from any personal policy drivers may carry and is not automatically lost if a personal policy is cancelled. | If your personal insurance policy is cancelled, you also automatically lose the Uber wrap-around coverage needed to transport passengers for compensation. | The commercial auto insurance policy issued by Economical provides coverage from the moment the driver makes themselves available to accept a ride in the Uber app to the moment the request is completed. When driving the vehicle for personal use, the driver relies on their own personal auto insurance policy. |
| Provides $2 million liability 24 hours per day, 7 days per week. It is a legal requirement for taxi companies to have a minimum of $2M in place for commercial activity. | Provides up to $2 million liability coverage if an accident occurs during the specific period covered by the “wrap-around” coverage. | In Ontario, the policy provides up to $2 million in third party liability coverage that applies while the driver is enroute to pick up a passenger and while the passenger is in the vehicle. It is a legal requirement for ridesharing companies to have a minimum of $2M in place for commercial activity. Outside of that, personal auto policy amounts are in effect. |
| A brand-new Taxi driver in Facility pays $24,500 the first year. If he makes it out of FA into standard insurance, the rates range from approximately $7000 to $20,000. | Adds a cost of approximately 276.00 per year** to the driver’s existing insurance coverage. **Quote received Sept. 20, 2024 | While participating in Uber ridesharing, commercial auto coverage is available under the policy issued by Economical to Uber. |
| Consumers involved in an accident in a commercially-insured Taxi may launch a lawsuit if they wish. | “Consumers involved in an accident in an Uber cannot sue but will use Uber’s arbitration process, which they agreed to when they signed Uber’s Terms and Conditions.[3] | The commercial auto insurance policy issued by Economical provides coverage from the moment drivers make themselves available to accept a request to the moment your trip ends. Claims for incidents that occur during this time will be made against the Uber commercial policy, not the driver’s separate personal policy. When providing ridesharing, this coverage also helps protect passengers from the moment they are picked up to the moment they exit. |
[1] Although “wrap around” coverage is the term widely used in the Vehicle for Hire industry, Economical considers “time phased” to be a more accurate descriptor.
[2] This statement was made through an error in understanding. Taxi News was initially working to the assumption that every Uber driver covered by the Economical Uber policy obtained their personal auto insurance from Economical as well. In fact, personal insurance could be purchased from any qualified insurer. The driver’s personal policy might be cancelled or coverage declined if the driver fails to notify their personal insurer they are driving for Uber.
[3] Although Section 7 of Uber’s Terms and Conditions claim that “You will have to resolve disputes through arbitration. You will not be eligible to get money or other relief through court proceeding” in Ontario, Uber’s T&C’s cannot override Ontario insurance legislation which may allow for court proceedings.
