Zero shades of grey: insurance coverage for UberX drivers is a black-and-white issue

TORONTO, July 7, 2015 /CNW/ - To your auto insurance company, carrying paying passengers falls into the same troubling category as carrying explosives or radioactive materials.

Unless you have an OPCF 6A Endorsement as part of your auto insurance policy, you are not insured to carry paying passengers, states Philomena Comerford, President & CEO of Baird-Macgregor insurance.

"It's a very specific endorsement. That's what you need. This is the endorsement for which taxi drivers pay dearly; without it, your insurer can deny your claim," she says.

"Technology does not trump the law. To the insurer, it does not matter if the car was dispatched using an app or dispatched using a telephone. If you're making money from it, you are carrying paying passengers. Period, full stop. It's black and white; there are no shades of grey."

Comerford, a specialist in auto insurance, is gravely concerned that Ontario drivers have gotten the impression that they can work for so-called "ridesharing" organizations like Uber and Lyft with only the personal insurance policy they put on their car.

"People are getting into it thinking 'Oh, it's like delivering pizza! I'm going to be an UberX driver!' They do not understand that they could lose everything they own. If they get involved in an accident and there's no coverage; they could get a judgement against them putting all of their personal assets at stake plus they could face charges for not being properly insured."

Uber, she says, "is trying to introduce a thousand shades of grey to something that's black and white."

Indeed, section 3 of Ontario's OAF 1 Standard Auto Insurance application asks this very straightforward question:

"Will any of the described automobiles be rented or leased to others, or used to carry passengers for compensation or hire, or haul a trailer, or carry explosives or radioactive material?"

The answer to this question is either "yes" or "no." If the applicant answers "yes" to this question, he or she will almost certainly be declined for personal coverage and will instead be referred for a commercial policy.

If the applicant answers "no" to this question and then proceeds to carry passengers for money, the insurer can take the position that there was either misrepresentation or non-disclosure; potentially facing up to a quarter million dollar fine or even jail time for misrepresentation.

"The problem is that everybody is unaware.  It's been hard getting people to see how important it is. The fact that the City of Toronto is ignoring the insurance issue is maddening: none of these people are properly insured! Toronto has jurisdiction over municipal taxi licensing regulations, but not the provincial Insurance or Highway Traffic Acts."

The issue of insurance for Uber drivers is now in the spotlight, owing to an accident which took place on June 3^rd in Toronto when an Uber car carrying paying passengers apparently ran a stop sign and plowed into a Diamond cab. The Diamond cab is insured with an OPCF 6A Endorsement; the driver of the Uber car had a personal policy with DesJardins.  

Joe Daly of DesJardins stated at the time, "DesJardins does not insure Uber drivers. We do not insure taxicabs. We do not offer commercial policies in Ontario."

Comerford points out that a good deal of the confusion has resulted from the fact that Uber holds out an SPF 6 policy as "coverage" for its drivers.

"An SPF 6 provides non-owned auto liability coverage, and there is absolutely no connection between that and the OPCF 6A," she says. "The purpose of an SPF 6 policy is to protect a corporation whose staff or others use their cars on company business. It does not provide primary coverage; nor does it meet the financial responsibility requirements of the province of Ontario. The critical endorsement is the OPCF6A, Permission to Carry Paying Passengers which must attach to an Ontario Auto Policy OAP #1- Owner's Policy."   

"Without it, an UberX driver could lose everything they own in the event of an accident."

Backgrounder #1: What the insurance companies say about Uber coverage

Allstate Insurance of Canada: Does not cover and will not be offering a policy in Canada to cover personal vehicles used to carry paying customers.  There is no regulatory framework.

CAA:  driver with a CAA personal auto insurance policy is not covered to transport passengers for payment. All standard insurers don't offer this coverage. The standard auto policy, used by all insurers, excludes coverage for vehicles transporting passengers for compensation. CAA Insurance does not offer commercial insurance.

Co-operators General: When we sell a Co-operators General Insurance personal auto policy, we do ask if the client will be using the vehicle for any sort of business use, and services like Uber would fall into that category. There is certainly an expectation that that sort of activity would be disclosed either when the policy is purchased or when they start using the vehicle for that sort of thing, depending on the situation. Failing to disclose that could be a case of misrepresentation, which could void the policy and lead to denial of coverage.

DesJardins General: DesJardins does not insure Uber drivers. We do not insure taxicabs. We do not offer commercial policies in Ontario.

Economical Insurance: We don't write Uber, and we have no appetite to write Uber policies.

ING Canada/Intact Financial: We are looking into this and will continue to keep our customers updated. We recognize that our customers' needs and expectations are evolving. Our goal is to determine how we can best support our customers. 

Northbridge Financial: We have a very small book of auto business in Ontario. We are primarily a commercial lines insurer on transportation for pay.

Pafco: They do not cover and will not be offering a policy in Canada to cover personal vehicles used to carry paying customers.  There is no regulatory framework.

Royal & Sun Alliance: The standard Ontario Automobile Policy (OAP 1) as an example, specifically excludes coverage for vehicles carrying paying passengers. In order to re-introduce this cover, a specific premium endorsement would be required to address this unique exposure. As Uber is a relatively new area for the insurance industry, RSA Canada is working with the Insurance Bureau of Canada on how to best address this emerging risk. Mandip Hullait, Director, Head Office Auto, CI & Global Specialty Lines at RSA Canada

State Farm Insurance Company: In terms of Uber coverage, State Farm Canada provides our customers with extensive private and commercial auto insurance backed by excellent claims service; however we do not offer coverage to those that wish to participate in these forms of ride-sharing programs.

Backgrounder #2:  Risks of Misrepresentation

What is the risk of misrepresenting yourself to your auto insurance company – for example, declaring in Section 3 that your automobile will not be used to carry paying passengers, when in fact you are carrying paying passengers? The possible ramifications are significant, and they are printed on every insurance application¹:

• Warning - The Insurance Act provides that where: (a) an Applicant for a contract, (i) gives false particulars of the described automobile to be insured to the prejudice of the Insurer, or (ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein; or (b) the Insured contravenes a term of the contract or commits a fraud; or (c) the Insured willfully makes a false statement in respect of a claim under the contract, a claim by the Insured, for other than such statutory accident benefits as are set out in the Statutory Accident Benefits Schedule, is invalid and the right of the Insured to recover indemnity is forfeited.
  
  
• Warning – Offences: It is an offence under the Insurance Act to knowingly make a false or misleading statement or representation to an Insurer in connection with the person's entitlement to a benefit under contract of insurance, or to willfully fail to inform the Insurer of a material change in circumstances within 14 days, in connection with such entitlement.
  
  
• The offence is punishable on conviction by a maximum fine of $250,000 for the first offence and a maximum fine of $500,000 for any subsequent conviction.
  
  
• It is an offence under the federal Criminal Code for anyone to knowingly make or use a false document with the intent it be acted on as genuine and the offence is punishable, on conviction, by a maximum of 10 years imprisonment.
  
  
• It is an offence under the federal Criminal Code for anyone, by deceit, falsehood or other dishonest act, to defraud or to attempt to defraud an insurance company. The offence is punishable, on conviction, by a maximum of 10 years imprisonment for fraud involving an amount over $5,000 or otherwise a maximum of 2 years imprisonment.

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¹ Source: Ontario OAF1 application form

SOURCE Toronto Taxi Alliance

Rita Smith, Executive Director, Toronto Taxi Alliance, 647 242 5505, [email protected]