What is Uber and how does it work?

With Uber rising in popularity recently, it is no surprise that men and women would be interested in joining in and trying to make a little extra money. However, it is important to consider the complications that arise when you begin using your vehicle commercially. For instance, standard insurance coverage may not help you if you get into an accident while on the job depending on the specifics of the crash. Therefore, it is imperative that you understand the implications that Uber work may have on your coverage so that you can decide if you need to change your insurance plan or even take an Uber.

What is Uber and how does it work?

Uber is an app for mobile phones that allows a user to hail a ride from their smart phone. Currently, Uber is the biggest competition for traditional taxi and black car services. Passengers just open the app, request to be picked up, and pay for the ride once they arrive at their destination. The cost is often much lower than a traditional taxi service. However, a unique part about Uber is that a significant amount of its pick up requests are completed by local drivers with their vehicles. The local drivers and their cars are checked to make sure they meet a certain standard, and that is it. After the initial inspection, they may begin picking people up just like a regular taxi. Much like a standard taxi service, Uber does not own any of the vehicles or directly employ any of the drivers.

How driving for Uber can affect your automotive insurance or accident claim

It is possible that your insurance policy will not provide coverage for you if you begin to drive for a service like Uber because private car insurance policies often have a list of exclusions attached to them, and driving for hire is often one of those exclusions. If you begin driving for Uber or any service like it, you may want to check you your automobile insurance provider to see if your insurance policy covers commercial driving. If it does not, you may need to consider getting some form of supplemental commercial auto insurance.

Likewise, if an Uber driver injures you in an accident, there is a chance that the Uber driver may be unaware of these insurance discrepancies, leaving those injured after an Uber car accident without compensation for damages.

When does Uber provide insurance coverage?

Before a driver can begin working for Uber, Uber ensures the driver has the proper amount of car insurance. They then provide supplemental insurance coverage as long as the app is on. So, when a driver has the app off, they are only covered by their car insurance. However, once the app is turned on, the driver gets a low-level liability insurance as well. Once the driver accepts a trip, the liability insurance gets upgraded until the driver delivers the passenger safely to their destination. Until recently, Uber only offered coverage for their drivers if the accident occurred while a passenger was in the car. However, after various lawsuits, the company has updated its policy.

Because the insurance they provide is only liability insurance, the driver will be responsible for fixing their car after any accident. The insurance Uber provides will only pay for any damage done to the other vehicle provided that the crash is caused by the Uber driver.

Uber and commercial driver's license

Once a driver picks up a passenger for Uber or any similar service, they begin driving professionally. Even though you are considered to be an independent contractor, some states consider you also to be a commercial driver. Each state's laws are different, and which ever service you work for should be able to notify you if your state requires you to have the commercial license before you can legally work for them. If they are unable to answer your questions adequately, confer with your local DMV.

If your state requires that you obtain a commercial driver's license to drive for Uber and you fail to do so, you may be prosecuted if you get into an accident, even if you have commercial auto insurance. However, the complication surrounding insurance and working for Uber may soon be simplified soon. With Uber and other companies like it on the rise, many insurance companies are creating policies specifically for Uber drivers that provide them with an alternative to a typical commercial auto insurance plan.

If you do plan on working for Uber, you should be up front with your insurance company about your intentions of being a driver for hire. Ask them to see if you need any form of commercial insurance, and learn if you need a commercial driver's license before you begin.