The whole “Uber” phenomenon is very interesting to insurance nerds because it shows how a simple computer app can totally change a cornerstone of our industry.
Here’s the issue: Since the beginning of time, personal auto insurance policies in Ontario have always had the clause that you cannot use you vehicle for “compensation or hire”.
Generally, if you do need to use your personal vehicle for “compensation or hire”, you required a commercial insurance policy.
Over the years, the industry has developed a “business use” rating for situations when, as example, a real estate agent uses their vehicle in the course of their employment or a young person delivers pizzas in their own vehicle. These situations technically violate the “compensation or hire” clause but insurance companies quickly determined figured out that they could charge a bit extra premium for the business use risk and not have to go with a commercial policy.
In the past, if you wanted to use your personal vehicle as a part time cab, that was a huge no-no. You would have to get cab insurance and the cost could be in the range of $10,000 to $12,000 per year.
Then along came Uber…and we see people that are not really using their vehicles as cabs but then using it for much more than business use. Interestingly, rather than running away from this, most big insurance companies are trying to figure out how to properly insure people who want to be Uber drivers.
Aviva insurance has been the first to come out with an endorsement that can be added to your policy so that you can be an Uber driver for up to 20 hours per week.
What I find very interesting is that the insurance companies are rushing towards the issue rather than away, it’s a good example how they are anticipating and trying to capitalize on market changes rather than burying their heads in the sand.
If you are or know of an Uber driver, please feel free to reach out to me to discuss your unique insurance needs: 519-739-8228