Given the state of uncertainty as regards auto insurance for an Uber driver, especially in the United States, we decided to do a Q & A session (Question and Answer session) with Eugene J. Solomon, an Insurance expert licensed in multiple states and with over 25 years of experience.
Eugene has an interesting take on insurance for Uber drivers and leans more towards commercial insurance for Uber drivers (as a rule of thumb). He also answers a lot of questions that Uber drivers have regarding coverage, and what to do if you get into an accident whilst driving with Uber. Read the full Q & A below to find out his expert opinion and general thoughts as it relates to Uber and insurance.
a) What is your name?
Eugene J. Solomon.
b) Where do you work, and what is your position/title?
My company is “Southern California”, and I am the Agency Principal.
c) What does your job entail?
We are a full service independent brokerage firm assisting clients with Auto, Home, Umbrella, Business, and Life Insurance
d) How long have you been in the insurance industry?
I began as a Claims Adjuster in 1990 before becoming a Full Time Agent in 1993
e) Where do you stand on the widespread notion that Uber is disrupting long held industry regulations? (Specifically relating to insurance)
If an industry is stagnated it’s important to have innovative companies come along and challenge those stagnant business models. Regulation in itself can also be stagnant and should respond to the marketplace.
f) What is your general opinion on the Uber business?
I’m excited about Uber generally and what they can do. Increased access for senior citizens who may not find cabs to service their area in addition to the job opportunities Uber creates; leave me with a positive impression. The convenience is incredible.
g) What is the conflict between the business model of Uber and standard insurance policies?
Uber’s innovative model disrupts the traditional insurance model by having a hybrid usage of your personal automobile. Using your car as a livery conveyance and a personal auto is not something most insurance companies are prepared for.
h) What are the various types of insurance policies that impact an Uber partner and/or driver?
For Auto Insurance there are generally two categories: Personal Auto and Commercial Auto. Personal Umbrella Policies may be negatively impacted by driving with Uber as the underlying coverage may not be appropriate.
Editor’s Note – Our expert talks more about commercial insurance in the follow up questions.
i) What does an Uber driver need to do from the start of the business to ensure that they never have an insurance related problem?
The safest strategy is to insure your vehicle as a Commercial Vehicle right off the bat. As these policies are more expensive, factor the additional cost of insurance into your business plan. If your vehicle is insured as a Commercial Vehicle, you should be able to avoid coverage issues that may arise if you only had a Personal Auto Policy.
Commercial Insurance allows for usages not typically covered under a personal use policy. [Furthermore], Commercial Policies typically have much higher Liability Limits than personal use policies. Most, if not all, personal insurance policies exclude Livery, carrying passengers for a fee.
Our opinion is Commercial Insurance policies suit the Uber driver best. Some companies are offering an Endorsement on personal auto polices but they can be just as expensive as a commercial policy.
Editor’s note– Your selection of insurance should be influenced by cost as well as coverage, since you are running a business. Also, depending on the class of Uber service you intend to run under, commercial insurance might not be necessary. See our UberX kit, and Uber Black kit’s for more information on this.
j) How does an Uber partner (with multiple drivers) go about insuring a fleet of cars intended to be used for Uber?
The most effective way to handle a fleet would be a Commercial Auto Policy. Discounts and fleet pricing will help lower the cost vs. stand- alone coverage for each vehicle.[Also,] with luxury vehicles you may have additional equipment to insure. However, from a standard coverage standpoint the basics [previously discussed] apply.
Also, if you have a fleet of vehicles to operate consider how you may want to insulate yourself from Liability claims. Should you have Business Insurance? An LLC or Corporation? Do you have multiple drivers and what is their relationship to you? Are your drivers classified as Independent Contractors or Employees? Some States such as California have a presumption [that such a worker is an employee]. Have a candid conversation with an independent broker who represents many companies.
k) Can an insurance company just decide not to cover an Uber driver’s car when it is involved in an accident?
Most insurance provided by Uber with James River is Secondary to your individual policy. First and best practice is to take a picture of the license plate of the other vehicle. Document the scene and incident the best way possible – photos, witnesses, and police report. If you have Uninsured Motorist Coverage, then injuries may be covered. If you have Collision insurance and are insured properly, your vehicle damage may be covered.
l) If the answer to the previous question is yes, what are the possible situations?
An Insurance company can’t just decline a claim: They must have an investigation and valid reason to decline, pointing to an “Exclusion” contained in your policy. If an Exclusion doesn’t apply they may point to your application with the insurance agent. The agent would have asked about the vehicle usage (For example: How many miles to and from work? How many miles per year? Any other drivers? Any passengers for a fee?). You sign the application and are held to the responses contained therein. If the company can determine you misrepresented any of the above they can “rescind” the contract and it’s as if you were never insured at all. It is very tough for insurance companies to deny a claim. In California, for example, they may be accused of “Bad Faith” denying the claim in error which could lead to a large judgment against the company. Each state will vary.
m) Why doesn’t Uber create a comprehensive Master Policy for Uber drivers?
Creating a Master Policy for all drivers could be good for the drivers but likely bad for Uber. Master or Group pricing gives preferential and easier underwriting, higher coverage and lower prices for driver/owners. However, by having a group policy another barrier is taken down toward defining Uber as a transportation employer rather than a tech company.
n) As an expert, would you say that Uber is obligated to cover their drivers?
My opinion is they should cover drivers as the primary insurance provider [from the moment the driver is available to pick up passengers]. Any business relationship is based on mutual trust and respect. Uber drivers should be treated as equal partners in this enterprise. Uber is not successful without their hard working network of drivers.
o) What documents will one need in the process of setting up an insurance policy for an Uber vehicle?
Driver information- names, ages, driver license numbers, garaging address, and vehicle identification numbers.
p) What is your general advice for Uber drivers who have been turned away from insurance companies because they drive for Uber or other ridesharing companies?
Contact an independent broker. Having choices of carriers to place you with means better pricing and a better coverage fit.
q) Can our readers reach you, if they are looking for an insurance quote for their Uber vehicle? If so, how can they?
You can reach us on our website www.solomoninsurance.com or me via email. Note-With all of the required information a policy can be written over the phone in 30 minutes or so.
r) Any last words of wisdom to our Uber drivers/ Entrepreneurs?
Don’t try to cut corners on cost. Be honest about your vehicle usage. Enough insurance companies have come into the market where you will find something. The money you save today could come back in multiples when you have an uncovered claim. Information will vary across States.
For more information about Eugene J. Solomon (National License Number 2608162), and to drop him a note follow the links below:
To receive professionally vetted information that will assist you in running a profitable Uber business whilst staying insured download our Uber kit at the top right of this page.
Other Interesting Uber Related Posts
For our blog posts on some of Uber’s Services, see the links below:
- Responses to Uber Rate Cuts in North America
- An Introduction to Different Uber Services
- Uber Insurance Issues and Commercial Insurance
- Uber Car Requirements: 420 Uber Black Cars Analyzed.
- Uber Car Requirements: 90 Uber SUV Vehicles Analyzed.
- Uber Car Requirements: 580 UberX Cars Analyzed.
- Uber Car Requirements: 115 UberXL Cars Analyzed.
For other popular posts you might be interested in, check the links below: