Uber and Insurance – Things You Probably Did Not Know

Whether you are an Uber driver or Uber customer, there are some things that you should be aware of before you turn on that app to accept passengers or use that app to hail a ride.

First of all comes terminology.  Regulators call Uber, Lyft and their competitors Transportation Network Companies or TNCs.  This distinguishes them from taxis and liveries because, they say, they don’t own or lease the vehicles and the drivers are not their employees.   This is not settled in the courts yet, but, for now, we will use that definition.

The second definition is Periods.  There are 3 periods, Period 1, 2 and 3.  Very creative.  Period 1 is the time from when a TNC driver starts the app and the time he or she accepts the job to pick up a passenger.  Basically, idle time, but when the driver is looking for fares.

Period 2 starts when the driver accepts a trip and ends when the rider enters the vehicle.  Period 3 covers the time when the rider is in the vehicle.

Some insurance companies are not keen to insure drivers who work for TNCs.  In fact, a script from Geico leaked in the SF Chronicle told agents to refer TNC drivers to the fraud department – that their normal auto policy did not cover TNC drivers.  This is in spite of the fact that Uber and Lyft have provided insurance for periods 2 and 3, but not period 1 as primary coverage for quite a while.

In early 2015, Geico came out with a hybrid personal-commercial policy that would cover TNC drivers.  It is currently only available in certain states.  Likely, it costs more – that would be why the insurance companies like it.

Metromile uses an ODB II dongle to track when a driver is “on the clock” and when he or she is not to determine whether they are liable if the driver has a accident.  If there is an accident and you are a TNC driver, they will check with the TNC company to see if you were working to figure out whether you have coverage from them.

In California, they recently passed a law requiring TNCs to provide coverage during period 1 – when the car is empty but you are looking for a rider.  The catch is that the coverage is not the $1 million that Uber always talks about, but rather $50k per individual, $100k max plus $300k in property damage.  While $50k or $100k is not insignificant, it is way less than $1 million.

More importantly, the California law says that TNC driver’s personal policies coverage of stuff like comprehensive, collision and medical are not active during period 1 unless the driver has purchased a TNC aware policy.

As a driver, it is important to understand who will and will not pay in case of an accident.

As a passenger, it is important to who will be responsible for paying in case you are hurt while in an Uber machine.

Why is this a security or privacy issue?

Because the insurance carriers want to use the telematics (basically, the built in cell phone which connects to the car’s computers in order to extract data) in the driver’s car to automatically track when they are on the clock and when they are not.  They want to coordinate this data with Uber and Lyft and their competitors so that they know when they are on the hook for an accident and when they are not and don’t have to try and figure out whether you are lying when an accident occurs about whether you were working or driving personally.  If they can collect data about the car and time and conditions of the accident and then extract data from the TNCs to figure out whether you were working or not, they just might get out of paying that claim.

What they are not saying is what they are doing with that data that they collect when you don’t have an accident.  Maybe to figure out if they want you as a customer.  Just sayin’.


Information for this post came from TU-Auto and Uber’s web site.

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