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For several years, services like Uber have been successful, and as unemployment rates increase, you might consider becoming a driver to supplement your income. You may also be concerned about the consequences for your car insurance and who will be responsible in the event of an accident.

Uber is a ride-hailing company that competes with taxis and black car services. Passengers request an Uber via a mobile app and arrange for a car to pick them up for a fee that is sometimes less than that of a regular taxi.

Although Uber has a range of commercially licensed black car services, it also offers a product called UberX, a service that allows local drivers to respond to Uber app alerts by driving customers in their vehicles.

Uber, unlike conventional taxi firms, allows almost everyone to drive. In certain states, Uber drivers are only required to have auto insurance, be of legal age, be healthy, pass a driving test, and pass a background check. Uber has commercial auto insurance in place to shield you in the event of an accident when using the Uber app. Read on to know how it works.

How Car Insurance Works for Uber

When Uber first started, it had a huge issue with their drivers’ insurance coverage; the majority of them didn’t have commercial plans. Instead, they had standard personal insurance plans, which both restrict coverage when the car is used for business. Insurance companies like Quoteradar Uber Taxi Insurance extend coverage based on the estimation of the risk of an accident and a claim.

When a car is used for personal purposes rather than for profit, the risk of a lawsuit is significantly reduced. When anyone has to drive for work, a commercial policy is usually needed. If Uber drivers purchased commercial insurance, they would be well protected, but the premiums are high, and few drivers do so.

Insurance Offered by Uber

The endorsements provided by some insurance providers in some cases were insufficient to cover the drivers. As a result, we offered our insurance, but it is of very low value and comes with a nasty surprise. This is how it works:

Period 0

This is the period when drivers are in their cars but not logged into the Uber app. Since the driver is not in “driver mode,” any crash would be covered by the driver’s auto insurance, not Uber’s.

Period 1

This is the period when the drivers are signed in to the app but have not yet accepted a ride request. If the driver’s insurance does not apply, here we offer liability coverage for any accident caused by the driver.

This is known as third-party insurance, and it only covers damages incurred by those who have been injured or whose property has been damaged. It does not protect the Uber driver’s injury or damage to his or her car. This liability insurance covers the following:

  • £50,000 for each person involved in an Uber-caused accident
  • £100,000 for total injury liability per accident, and £25,000 for property damage liability.

After reading the above, you might think your worries are over—The insurance provider will take care of everything, right? However, it’s not like that. The coverage just mentioned is referred to as “contingent” coverage. That is, it can only assist you after you have claimed on your policy. Uber would not even let you use their plans unless you can show that you have your insurance. But here’s what you will have to deal with:

  • Uber’s insurance will step in if you haven’t purchased a ride-sharing endorsement and your company rejects the petition.
  • Your insurance will protect you if you have an endorsement, and Uber will cover the waste that your policy does not cover. It’s worth noting that your policy must be activated first, and Uber’s policies aren’t always needed.

But there’s a sting in the tail for drivers who don’t have the value of a ridesharing endorsement: If you have been driving commercially and filed a claim on a personal policy, you have violated the policy, and your benefits will most likely be cancelled.

That isn’t the outcome you were hoping for. To make matters worse, if the losses and injuries are greater than Uber’s insurance policy limit, victims can still sue you for the difference.

Periods 2 and 3

This is the period from the time the driver accepts a trip to the time the passenger exits. Quoteradar has a £5 million public liability insurance policy. As a result, if a passenger is injured while riding in an Uber car and the driver has an accident, this liability coverage will apply. This will also include accidents and automobile damage suffered by someone struck by an Uber car when the ridesharing driver is found to be at fault. However, the Uber driver’s injury will not be covered by the liability coverage.

As previously stated in Period 1, any lawsuits filed by drivers with endorsements will be handled by their carriers first, with company rules taking effect if the damage amounts surpass the insurance limits of the driver’s policy.

However, regardless of who or what caused the underlying incident, there is some positive news in terms of harm to the ridesharing driver’s vehicle. Unlike in Period 1, Uber’s collision and robust strategies kick in in Periods 2 and 3. However, this is “contingent” coverage, which means it will operate as follows:

  • If you have an endorsement, your policy will pay first, and any penalties that surpass your policy’s limits will be covered by Quoteradar.co.uk. However, the coverage is limited: The maximum amount is the vehicle’s gross cash value, with fewer deductibles of around £1,000.
  • If you don’t have an endorsement, you are in a bad situation. You won’t be eligible for coverage unless you have first filed a claim with your carrier. However, by filing a lawsuit with your carrier, you have informed them that you have broken your policy’s terms, putting your policy at risk of cancellation.