Focus: Is Uber’s insurance policy adequate?

Uber’s insurance coverage could finally be open to scrutiny following the failure of a sealing application in a recent Ontario case instigated by the City of Toronto as it seeks to close the service down.

The adequacy of the policy may prove to be the weak link in a success story that has gone from strength to strength so far. However, there’s considerable debate over whether the attacks on the ride-sharing service are an attempt to protect the public from something it actually wants.

Uber is facing legal challenges in multiple jurisdictions from consumer groups and municipalities and in Ontario it’s now facing proposed legislation that would offer a powerful disincentive to its drivers. Bill 53, the protecting passenger safety act, has just passed second reading. It will increase penalties for unlicensed commercial drivers to between $500 and $30,000 and allow authorities ability to suspend licences, add demerit points, and seize vehicles.

Laura Hillyer of Martin & Hillyer Associates in Burlington, Ont., believes there’s a role for the government in policing the Uber phenomenon.

“I think that the government has a responsibility to ensure that members of the public using Uber are safe. Part of being safe is having adequate insurance coverage in effect in case of an accident. I think that many members of the public assume that Uber has insurance that would cover them in the event of an accident. Uber has maintained that it does and has even trained its drivers to think that it does.”

Charles Painter of Paterson MacDougall LLP in Toronto believes that most, if not all, of his municipal clients have concerns about Uber and how it can fit within their municipal taxi licensing bylaws.

“In my experience, licensing taxis and taxi drivers is primarily a public safety issue for municipalities who typically want to ensure that the vehicles are decent and properly insured and the drivers have valid driver’s licences and no criminal record. Toronto does a great job at that as do most municipalities,” he says.

However, he doesn’t believe municipalities need to worry about the details of the policy. “If things are unclear in regard to proper coverage responding, then I can definitely understand the municipal concern to see how it actually works,” he says.

“But motor vehicle insurance is a matter for provincial governments, not so much local municipalities. If Uber has worked with brokers or underwriters to develop and implement a valid insurance policy for the vehicles acceptable to the province, then I do not see why a municipality needs to see anything but the certificate of insurance to confirm that the insurance is valid in Ontario and will provide the necessary coverages. Presumably, the province’s insurance regulators have satisfied themselves it will work, so who pays what or how the split is made between subscribing underwriters seems irrelevant.”

There are others, however, who believe Uber should have to make its policy public as a matter of policy and support the March 18 decision that found the policy wasn’t a commercial innovation or trade secret requiring protection. “When you step into a form of public transit, you are making a decision about risk,” says Edward Bergeron of Bergeron Clifford LLP.

“Uber is the only form of public transit that I can think of where the consumer is asked to make that decision on an uninformed basis.”

He doesn’t believe anyone can be confident that Uber does in fact have an adequate policy. “An Uber passenger can feel secure about the protections offered by an Uber policy only after the first coverage case has been litigated fully,” says Bergeron.

Hillyer wonders why Uber isn’t addressing public concerns by publishing the policy’s details. “Uber has faced criticism in multiple jurisdictions over its perceived lack of adequate insurance. The easiest way to clear this up would be for Uber to satisfy regulators that anyone associated with Uber, whether a driver or a passenger, at any time is covered in the event of an accident. Uber maintains they have insurance that covers everyone during a fare, but there is uncertainty about

before and after and even during the ride given their refusal to confirm their insurance details to regulators.”

If the Uber policy fails, it’s the personal policies of drivers and passengers that will be in the spotlight next.
Bergeron points out that mandatory automobile liability insurance in Ontario has standardized policies that will generally not cover commercial activities. “We are all subject to the same policy wording. Our standard owners’ policies do not cover for commercial transportation of passengers.”

Bergeron refers to the general exclusion in the standard owner’s policy that applies when “the automobile is used as a taxicab, bus, a sightseeing conveyance or to carry paying passengers.”

“The current Uber coverage may be all that’s available,” says Bergeron.

“Is it sufficient to compensate for catastrophic loss? Who knows unless we get to see the policy. Personal coverage will specifically not fill the gap.”

Hillyer notes Uber drivers are clearly engaging in a commercial activity but many don’t have commercial auto insurance.

“There could be a big gap in coverage here. Many drivers aren’t informing their auto carrier about their commercial activities because the premiums would increase considerably.”

Hillyer believes this is a cost they should be shouldering. “Ultimately, there are increased insurance costs when driving for a commercial purpose and these costs have to paid to ensure that everyone associated with an Uber ride is safely protected in the event of an accident.”

Given the uncertainty, it’s not surprising that Uber is receiving negative attention, but some lawyers would like to see a more constructive and accommodating approach. “I believe in innovation and capitalism as driving forces behind a thriving economy, so municipalities in my view should embrace Uber and strive to adapt existing policies to it,” says Painter.

“It seems to me that across Canada, Uber threatens deeply entrenched financial interests focused upon preserving the status quo. As a conservative-minded citizen, I want less government, not more. I want better services for the best price. I want lower taxes, not more red tape. I do believe that policies can be adapted or created to include Uber if the political will gets behind it.”   

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