In the last quarter of 2015 two insurers, Aviva Canada[i] and Wawanesa Insurance[ii], were reported to be cancelling personal auto policies for drivers who were using their personal vehicles to pick up passengers for hire.
In contrast, on September 8, 2015, Intact Financial had announced it had entered into a “cooperative agreement” with Uber to develop a tailored insurance product to address the insurance gap in coverage for UberX drivers.[iii] However, over four months have passed since the announcement and there has been nary a detail and no confirmation that anything has been filed with the Financial Services Commission of Ontario (FSCO) - the provincial regulatory body that oversees the Ontario insurance industry.
In the interim, it would appear that Aviva Canada has reconsidered its position. On January 6, 2016, the insurer announced that it will launch an insurance product for part-time, casual UberX drivers as early as February 2016. According to Aviva, it will work with regulators across Canada to find solutions to the ride-sharing insurance coverage issues[iv] and confirmed that the new policy would be an “add-on” (endorsement) to existing personal auto policies.
According to the insurer, its proposed policy addition will protect ride-sharing drivers from the moment they turn on the Uber app through to collecting and dropping off passengers. This would appear to eliminate the previous awkward scenario advanced by Uber where the driver’s personal auto policy was supposed to respond during the “intermediary period” – where a driver was waiting for a pick up request.
According to Aviva, coverage will be based on transporting eight or fewer passengers, holding a valid driver’s licence for six years, no other intended commercial purpose and for ride-sharing drivers who want to work up to a maximum of 20 hours per week. Should a driver want to drive more than 20 hours per week, he or she will require a commercial auto policy.
The cost for the additional coverage would be a calculation based upon the income earned by the driver, considering such factors as time spent working, area driven and driving record. It has been suggested that the monthly cost of the coverage will be approximately 10-15% of the driver’s average monthly income.[v]
However, like Intact, nothing has been formally filed with FSCO by Aviva. As such, it is unlikely that anything will be in place in the near future and certainly not by February.[vi]
As it currently stands, the standard personal auto insurance policy (OAP 1), which was created and mandated for all Ontario auto policies by FSCO, contains explicit language that prohibits commercial activity with a personal auto policy. Thus, a change to the text of the standard auto policy would be required in order for coverage to be extended to those who use their personal vehicles for commercial purposes. The other, less amiable option, would be to continue with the current standard auto policy language but permit an endorsement that would override the specific excluded risk of carrying passengers for hire. This appears to be the avenue Aviva is suggesting in their press release. This arrangement would be permissible under section 227(2) of the Insurance Act.
It is clear that there remains a real and verifiable gap in insurance coverage in the way current ride-sharing programs operate in Ontario. The insurance gap has been acknowledged by FSCO. On March 24, 2015, FSCO released a cautionary info-graphic drawing attention to the exclusions in coverage applicable to drivers and passengers of ride-sharing services.[vii] Kristine Hubbard, spokesperson for Beck Taxi, stated that Aviva’s announcement highlighted the lack of proper insurance of UberX drivers.[viii]
Uber Canada continues to claim that “every UberX ride is covered by insurance.”[ix] According to Uber Canada’s website, their drivers’ personal insurance policy are primary coverage and Uber’s commercial general liability (CGL) policy with an endorsement for standard non-owned automobile coverage is secondary. Uber maintains that this arrangement provides adequate and compliant coverage. The Ontario regulator, the Insurance Bureau of Canada, as well as insurance companies, do not agree.
John Pecman, Commissioner of Competition for the Competition Bureau of Canada, said “the arrival of ride-sharing services presents an important opportunity for regulators - an opportunity to inject increased competition into the taxi industry by creating a single, level playing field for all.”[x] Toronto’s Mayor John Tory has indicated that the City will introduce regulations to level the playing field between taxi drivers and ride-sharing drivers in 2016.[xi] Draft regulations are expected to be before Toronto City Council by Spring 2016.[xii] Also of interest, UberTaxi was recently granted a taxi brokerage licence by the City of Toronto on January 22, 2016.[xiii] The brokerage licence does not affect or apply to the ride-sharing UberX service.
Insurance companies appear to be clambering to be first to market with an insurance product to address the insurance coverage gap. It is doubtful that Aviva Canada will make its February 2016 timeline. We should expect something by Spring/Summer.
There are now two horses in the race but we will likely see the field expand quickly as other insurers seek to gain entry into this burgeoning market.