Uber: Understanding the Relationship Between Your Employees, Your Insurance Policy and Ride Services

In 2015, expense-management system provider Certify saw Uber surpass taxis in corporate travel for the first time. With the allure of more cost-efficient travel from the sharing economy, many businesses like the idea of using Uber instead of more traditional car services. If you are going to consider using Uber as a ride service for your company, you need to understand the exposure. This starts with the drivers.

Uber drivers are prequalified, meaning they must be at least 21 and pass a three-step background screening with county, federal and multistate checks that go back as far as the law allows. However, a 2015 lawsuit in California alleged that they failed to detect the criminal records of 25 drivers. There is no indication as to how often Motor Vehicle Reports (MVRs) are run after drivers are hired. A number of states have laws mandating how often MVRs are reviewed for those providing transportation services.

Driver-Partners are Independent Contractors

Driver-Partner Contracts

Uber considers drivers to be independent contractors. Two recent class-action suits challenging this have since been settled, and Uber won both.

Contracts are with Uber B.V., domiciled in the Netherlands. “Partners” are required to carry insurance, but their own personal automobile policy may not provide coverage. Virtually all personal automobile policies exclude vehicles while being used as a car service. Some carriers are now specifically tailoring programs to address this exposure, but it varies by state. Uber requires driver-partners to comply with minimum insurance requirements as dictated by state statutes.

Other Issues You Need to Consider

The 15-Second Rule

Uber drivers have 15 seconds to respond to a service call.  If they repeatedly fail to respond within that time period, Uber can cancel their contract. While there is an incentive to provide exceptional service, it can lead to distracted driving.

Privacy Issues

Like many companies, Uber has access to your employee’s private information. In 2015, there was a breach. While it only affected the drivers, it could have had far reaching effects. Also, Uber software has a customer-tracking function. There is evidence that Uber did not have strong enough controls over that system. In 2016, Uber paid $20,000 in fines and agreed to improve its internal controls over this information. In the settlement, Uber agreed to encrypt GPS-based location information as well as limit who has access to that information.

Who Are You Going to Call?

If your employee is involved in an accident, there is no call center to report the incident, only an email address.

There Is No Meter

Uber provides an estimate before you buy, but rates can vary and are usually a reflection of supply and demand. Those rates can be excessive and will ultimately be passed onto you.

Driver Verification

If a ride arrives that is not the driver or is a different vehicle than described, there may be no coverage per Uber’s insurance policy. Therefore, verification of the driver and vehicle is recommended.

Your Employee and Uber

Signing up for the Service

When your employee uses Uber, he/she enters into a personal contract with it. There is no direct contractual relationship between you and Uber. When an employee enters into a contract:

He/she agrees to indemnify and hold harmless Uber, its affiliates, its licensors and each of its directors, officers, other users, employees, attorneys and agents for all claims and expenses due to his/her violation or breach of any terms of the agreement, his/her violation of any rights of any third party and his/her use or misuse of the application or services.

Uber does not accept liability in connection with and/or arising from the transportation provider or any acts, actions, behavior, conduct or negligence on the part of the transportation provider. The application specifically states that any complaints should be submitted to the transportation provider, not Uber.

How Your Corporate Policy Will Respond

Liability

If your policy covers scheduled vehicles only, there is no coverage.

If your policy covers “any auto” or specifically covers “non-owned” autos, you “should” have coverage on an excess basis. Your carrier may challenge this because there is no direct contractual relationship between you and Uber. If you can prove the vehicle was used for business and there was an implied agreement between you and your employee that use of Uber was permissible, there should be coverage. It will only be for you. Coverage may be available for your employee if you also have an “employee as insured” endorsement on your policy.

Drive Other Car (DOC)

If the employee who enters into a contract with Uber has DOC coverage on your policy, he/she will have protection.

Medical Payments

Coverage is excluded. This is to avoid any potential duplication of coverage should your workers’ compensation policy respond.

Uninsured/Underinsured Motorists

Your policy should respond as long as the trip is considered business. (If the trip is considered personal, the individual’s own personal automobile policy should respond.) Uber also has coverage in its program.

Workers’ Compensation

Your policy will respond in the same manner as it would if you had an accident in an owned vehicle.

How Much Insurance Does Uber Have?

At the time of writing, Uber’s coverage breaks down as follows.

Contingent Coverage

Coverage begins once the driver-partner accepts a trip and continues until the client is dropped off. Coverage applies regardless of whether the driver’s personal automobile coverage applies.

Online (Ready for Service), but Not On the Trip

Uber carries $50,000/$100,000 for bodily injury and $25,000 for property damage.

In Service

Uber has $1 million in coverage—including $1 million for uninsured/underinsured motorists.

Surplus Lines Coverage

Unless things have changed since the time of writing, Uber has coverage with a surplus lines carrier. Because surplus lines carriers are not subject to state regulatory approval, there is no way of knowing how the policy would respond or if their rates assure long-term viability.

About the Author

Laura Walton

Laura Walton is a senior vice president for Lockton, the world’s largest privately held, independent insurance broker. Laura specializes in providing expert advice to small and large business owners and executives on risk assessment and management strategies. Her experience includes advising venture capital and private equity firms regarding insurance strategies associated with merger and acquisition transactions and her expertise spans the financial services, food processing, technology, life sciences, retail, transportation and manufacturing sectors.

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