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Risk in Context

Understanding Ontario’s New Ridesharing Insurance Options

Posted by Scott Cober March 08, 2017

In the last year, the Financial Services Commission of Ontario (FSCO) approved two interim insurance products (one for Uber Canada through Intact Insurance, and another for RideCo Inc. through Northbridge Insurance) to address the significant insurance coverage gap for the thousands of ridesharing drivers and vehicle owners in the province.

Until these two products came to market, personal auto insurance policies excluded the risk of “Carrying Passengers for Hire.” Similar to US ridesharing models, these new policies allow the Transportation Network Company (TNC) to become the primary commercial automobile insurance company when the registered ridesharing driver logs into the TNC’s online digital network in real-time.

How It Works

Both the Intact and Northbridge products rely on the online digital network to define the timeline that determines which policy responds in the event of an incident:

Pre-Acceptance Period Coverage:

  • Starts the moment the driver has logged onto the TNC’s digital network, and is available to receive requests for transportation services for compensation.
  • Ends before the moment where the driver accepts a request through the TNC’s digital network. Or, once the driver has logged out of the digital network.

Post-Acceptance Period Coverage:

  • Starts the moment the driver has accepted a request through the digital network (including while the automobile is en route), including while the automobile is carrying a rideshare passenger.
  • Ends the moment where the last passenger departs from the automobile, a trip is ended, or a trip is cancelled, whichever is later.

Both the Intact and Northbridge products cover leased vehicles with the rideshare drivers named as insured persons under the policies. This means the insurance responds prior to any other motor vehicle liability policy (under which the owner/lessor of the ridesharing automobile is entitled to indemnity as an insured named in the contract.)

It should be noted, however, that potential coverage gaps exist for ridesharing vehicle owners (or employers with leased company vehicles) during the Pre and Post-Acceptance periods.

  • Ridesharing drivers logged into the digital network looking for fares during the Pre-Acceptance period do not have an option to purchase the Waiver of Depreciation endorsement. In the event of an accident, the basis for settlement under the commercial ridesharing fleet policy is subject to Actual Cash Value (the amount necessary to replace your vehicle with a comparable used vehicle) and NOT the total list price of the new vehicle. Vehicle loss of use coverage is also not available during the Pre-Acceptance period. Finally, if the driver is found to be partially at-fault for the accident, the cost of a rental vehicle may not be fully covered.
  • Ridesharing drivers who have purchased increased Ontario Accident Benefits under their primary automobile insurance policy will be subject to the reduced minimum statutory Accident Benefit limits as the TNC’s fleet insurance policy does not currently offer the availability to purchase higher Accident Benefits during the Pre and Post Acceptance Periods.

Aviva Insurance has received FSCO approval for an alternative policy endorsement that can attach to a ridesharing vehicle owner’s personal automobile insurance policy to fill in some of the coverage gaps from the TNC’s commercial fleet insurance policy.

Ridesharing Risks to Employers

Theoretically, use of TNCs can result in significant cost savings for employee travel in lieu of using licensed city taxis and limos. However, employers should have a documented policy in place for employees to review TNC usage rules: 

  • Using a company vehicle or lending out the company vehicle for ridesharing services should never be permitted.

  • The Passenger Mode reservation should only be confirmed using an approved TNC with provincially approved fleet insurance coverage.

  • Logging out of the “Digital Network” to negotiate an off-meter deal should never be permitted.

Not all cities have approved bylaws for the regulation of TNCs. (These bylaws generally require that ridesharing drivers fill out a separate city application, pay a licensing fee, may require additional screening and background checks, and may also require snow tire use.)

New Technologies and the Challenge of the Unknown

What about drivers who work for multiple ridesharing services at once? It is becoming increasingly common for ridesharing drivers to be logged into multiple TNC applications at the same time. Should an accident occur during the Pre-Acceptance Period, the vehicle owner will have two primary TNC commercial automobile policies in place. Which policy pays first? Will the limits be stacked and paid 50/50? Or will the courts decide the appropriate sharing of the claim payment based on percentage of ridesharing driving / usage by each TNC company? Again, only time will tell.

Conclusion

The Intact/Uber and Northbridge/RideCo products help to fill in the immediate coverage gaps, as the provincial insurance regulators continue to evolve with a sharing economy. While still early days, these changes could set the stage for a surge in technological advances relating to personal vehicle usage beyond ridesharing. FSCO has advised that solutions will continue to be reviewed and changed as new technologies and competitors enter the market.

Related to:  Transportation

Scott Cober

Scott Cober is a Senior Vice President and the National Transportation Practice Leader with Marsh Canada Limited. In this role, he is responsible for coordinating the delivery of all Marsh Canada resources to the Marsh transportation brokers across Canada, developing marketplace strategies, and crafting solutions for unusual business and insurance risks.