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Thoughts on driving for Uber

I spoke recently to a few old friends to find some in their family are becoming Uber drivers to supplement their income. This is one of several new trends in sharing personal assets that started with some of the Generation X folks. It seems to be a good deal both for the car owner who generates some income using low cost methods of competing with the commercial transportation. Its also good for the ride sharing customer whose cost and convenience are better than using a taxi / limo. Sounds like a great deal until you look a little closer.

Did you ever know someone who used one of those super cheap contractors from Angies List, who do side work for less than the regular guys? It works out pretty good until something goes awry. Like a fire starts from some Gerry rigged electrical work or one of his helpers (who works for cash) falls from YOUR ladder and breaks his back. Well there is no insurance to take care of your fire damage and no workers compensation to take care of the injury. Guess who is going to be responsible for these problems? Well it's not going to be Angies List or the cheap contractor!.

Now back to the Uber scenario. So your son is going to drive his car for Uber and Uber has this nice contract he signs and they say they are going to protect him for up to a Million dollars in claims. Sounds pretty good right? They also tell him he has to follow and abide by all the laws and regulations for his jurisdiction. Seems reasonable. But how does that really affect to him

Some states will now consider your son a commercial driver (driving for hire, right?) and in those states he may need a commercial driver’s license. Is he going to inform his personal auto insurance carrier that he is driving for Uber? No doubt most of those will either not want him any more or will insist that he buy a more expensive special insurance policy designed for this ride-sharing purpose. Why does he need to do that when Uber provides that big $1M policy? Because it doesn’t cover all his exposures. Like before he accepts a new fare but is cruising around town or at hotels waiting for a call or after his last fare is done. (There may be coverage while he circles the airport and going directly from one call to the next). But what about the damage to his car in an accident resulting from his own fault or partly due to something done by the passenger? Where the injuries to your son are from that other uninsured driver, Uber may proved some coverage based on State minimum limits. They may also offer a separate, extra cost coverage for damage to his car with a fairly high deductible, but only for incidents while he is “on-the-clock. Making sure he is covered all the time is going to be pretty complicated. It is likely to be a very rude awakening to your son and you when his own insurance company denies his claim because he failed to tell them he is driving commercially and placing them at much greater risk. In any case, it is not a good idea to keep this secret from your insurance agent. His insurance company is unlikely to just back charge you for the additional premium if he has a mishap while he is driving for Uber. They will more likely deny the claim and cancel him.

This is even more significant if your son is on your family insurance program or the car is in your name. Even though the chance of this happening is quite small, the results could be financially devastating. Check this out carefully before you or your family members get involved and definitely discuss it with your insurance broker/agent.

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