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Home » The UBER Risks of Ride-Sharing
August 16, 2016

The UBER Risks of Ride-Sharing

The UBER Wild West

We live in a world that is constantly changing and being updated yearly, monthly, even hourly. We live in a world where we refresh our Facebook feed every 30 seconds to double check if there something new. We no longer live in a world where we have to use the phrase, “Just watching the paint dry,” because there are thousands of things to do in the meantime before the paint dries.

With this fast-changing, constantly updating world, it is almost as if we are heading back into the Wild West but on a digital level. Just as the Wild West was famed for its unregulated nature, famed outlaws, and ever-growing population with an ever-increasing need for regulations, the digital world is there right now.

Governments are having a hard time keeping up with the new technology coming out daily. They are trying to get oversight and regulation to the Wild West of the digital world.

Recent examples are drones and selfie sticks. Just a few years ago, these inventions were not invented or popularized yet. Governments have needed to write up regulations to say where drones can be used, especially so drones do not interfere with aviation matters or community events. Companies and local governments have had to write regulations on selfie sticks to say where they are able to be used properly. A recent example is Disney banning them from their theme parks.

As an insurance company, a wave of new technology coming to our attention is Ride-Sharing companies/jobs/apps such as UBER. 

What is UBER?

UBER is not just a fancy word that you can put before “Amazing” or “Complicated” to make you sound like a California Valley Girl. (“Like that relationship is uber complicated…”) UBER is a recent company that has taken the world by storm. It has allowed many people to have on-the-side employment by letting average people become a taxi service, when they want and for how long they want.

The first time I heard about UBER was when I was in Manchester in the United Kingdom and my friends were raving about hailing UBER taxis instead of regular taxis. The UK is famous for its black cab taxis that have a very distinctive design. But an UBER driver does not have to have a certain design. UBER drivers use their own personal cars (as long as it is a four door vehicle) to pick up riders. 

An app on your smartphone is used to hail a taxi. An UBER driver, when ready to pick up passengers, simply has to turn on his availability on the UBER app. A passenger can then use the app to “call” for an UBER taxi. The driver will get the passengers location, pick them up, and drive them to their desired location and the passenger pays the UBER driver through the app.

It’s an invention which has streamlined the taxi service through a smartphone application.

The UBER Grey Area

The new app company sounds simple, right? Well it is for drivers and for the passengers. The types of people that have had a headache are insurance companies, agents, and governments.


Taxi services have already had a good amount of legislation and oversight after many decades of service. A recent Colorado legislative bill classifies UBER as a Transportation Network Company (TNC), which is different from a taxi service.

Remember, we are in the Wild West of the digital age.

UBER is technically not a taxi service and is a TNC for three big reasons:

1)      An UBER driver is technically not employed by UBER but are independent contractors. They use the UBER app to find rides and are paid through it.

2)     The driver, not UBER, owns the vehicle driven.

3)     But the vehicle is used for both personal and business use.

The last point has caused a massive headache for professional people. The biggest one is what happens when an UBER driver gets into an accident? Is the vehicle covered by your personal insurance or by UBER?

It depends on where you are at in your journey.

If you have the UBER app off as a driver and are not “on duty” to pick up drivers, you are covered by your personal insurance.

If you are “on duty” and have a passenger in your car, or in route to pick up a passenger, UBER has covering insurance including collision damage, bodily injury, and commercial liability.

Now the Grey Area.

The time between an UBER driver turns on the app to pick up passengers and a passenger hails the driver, who covers the insurance? Imagine how many accidents could occur during this stage. A driver is on his phone waiting for someone to hail them while they are in the car, potentially even driving!

Does your personal insurance cover you? Usually not. They see the car as being on business duty and not personal duty.

Does UBER cover you through insurance during this time? For several years, the answer has been NO.


A big draw for people to use UBER drivers in not only the ease of using the app but also using the lower fares compared to taxi services. It can do this because of the lower restrictions it has as a TNC. Their drivers are independent contractors so they do not have to cover them as comprehensively as if they are employees, helping them drive down the costs of the fare.

An UBER Bill

Governments are starting to step in to talk about this gap in coverage.

According to the Denver Post, Arizona Governor Jan Brewer, said, “Consumer safety must not be sacrificed for the sake of innovation,” when talking about regulating ride-sharing companies. (Sounds like the Wild West?)

Last year, Colorado passed a bill to start regulating TNC’s. They are now requiring UBER and other TNC’s to start covering drivers during this gap. But right now, UBER only has Contingent Coverage Liability. It is only secondary coverage that pays for what your personal coverage does not.

But we are in the age of the Wild West. Expect more regulations to start to come.

For instance, just this summer, governments are starting to regulate UBER and workers compensation. According to UBER, if you get into an accident and have bodily harm, it will cover the passenger, but it didn’t cover the driver. Some places are trying to push for UBER and similar companies to make their drivers employees so they can be covered by workers compensation. But right now, states are simply passing a bill to have UBER include insurance on bodily harm.

But all this is to say that this business is ever changing. These policies and regulations were not in place just a couple years ago. But these policies and regulations can increase, changing the liability of the company and the drivers in just a few months’ time.


Know the UBER Risks

So are you thinking about becoming an UBER driver? Know the risks involved not only for the general person, but for those becoming a driver in Northern Colorado.

 1) Look out for No. 1!

As an UBER driver, you are technically an independent contractor, not an employee. Therefore, you need to know your risks of becoming a driver and take steps to protect yourself. I know it’s boring but read the fine print of your insurance and the UBER policies. 

2) Become a news aficionado.

With the Wild West of the digital age upon us, new regulations and limitations will increase. Regularly check the news to update yourself on these new policies so you know your risk. 

3) Cover Yourself

Accidents happen. Cover yourself with the most insurance you can afford. This might mean more than just personal auto insurance. Some companies are implementing ride-sharing policies for these drivers to cover the gaps. 

4) Get advice.

Contact other drivers or local independent insurance agents (like us!) to consider affordable coverage options or advice.


For drivers thinking about working in the Northern Colorado area:

 1) Know the market.

UBER started in larger cities. Taxi services have a bigger presence in the city. In Northern Colorado, the majority of people drive their own cars. The largest amount of work a driver will have will be on weekend nights when people are visiting bars and needing a safe way to get home after a few drinks. This means you will need to work late weekend nights and with intoxicated passengers. 

2) You don’t know who is getting into the car.

UBER has a great rating system where passengers can rate good drivers and drivers can rate good passengers therefore creating a good community. This works well in cities where UBER is widely used. In Northern Colorado, you may encounter more people who do not regularly use UBER except on weekend nights. You may more often than not have to pick up passengers you may not know. 

3) Protect yourself.

When dealing with a good portion of intoxicated people and not knowing who is getting into the car, learn how to protect yourself. Experienced drivers have good tips on how to protect yourself while driving. Visit websites to view what they have to say about their own experiences. Many have had to protect themselves before from unruly passengers. Be prepared to protect yourself before picking up passengers. Know the risks before signing on to drive!

Whew, this was a long one today. If you are still with me, please share your thoughts on this. Have you become an UBER driver in Northern Colorado? Do you think there are new technologies that need to be regulated? See you in the comments if you do!



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