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The Uber Fallacy: How Taxi Insurance Policies Make Taxis Better Than Uber

The Uber Fallacy: How Taxi Insurance Policies Make Taxis Better Than Uber
December 1, 2017 OTTIS Blog

As more unfavorable news stories come out about Uber, the flaws in the gig economy system are becoming more apparent. From passenger safety concerns to issues with regulation, Uber and other ride-sharing companies have been facing an onslaught.

But insurance is probably the most convincing reason that taxis are still better than Uber.

Unlike ride-sharing companies, taxi services have insurance to protect drivers in case anything goes wrong. With Uber, when drivers have a problem, they are left to fend for themselves.

So how does taxi insurance protect drivers, and why is it better than Uber? Read on to find out!

Uber Shifts Responsibility to Drivers

Every single Uber driver is employed as an independent contractor. This means that the driver alone is liable if anything goes wrong. And the insurance drivers have is likely insufficient.

Most personal insurance policies do not cover ride-sharing services like Uber. Instead, the driver now needs commercial insurance, which is very different from personal.

Uber states that personal insurance is enough coverage for drivers. However, this is in violation of the law in most of the cities it operates in.

That’s because if a driver only has personal insurance, it is illegal to use the car for commercial reasons, such as driving passengers for a fee.

The fact that Uber says one thing and the law says another has caused a nasty shock for some drivers, who find out after an accident that they aren’t covered.

Uber does have insurance that covers drivers while a passenger is in the car. They also cover a much smaller amount when drivers on their way to pick up their next passenger.

However, this coverage is insufficient and is not a replacement for proper taxi insurance.

Unlike taxi companies, Uber shifts the responsibility for covering insurance to drivers and makes them entirely responsible if anything goes wrong.

Ride-Sharing Services Avoid Regulations

Uber and other ride-sharing don’t define themselves as taxi services. For the most part, they are not subject to the same regulations as taxis.

They have been able to do this because they don’t own any of the cars or provide actual transportation services. What they do is connect drivers with people who need rides.

These regulations include driving tests and other safety measures that protect passengers. They protect drivers too. These regulations have made taxis safer for decades and raising the trust the public has in taxi drivers.

The lack of regulations around Uber creates a complicated grey-zone. In cases where things go wrong and insurance is needed, the legal process is anything but straightforward.

The lack of proper regulation around these services puts drivers more at risk. When the rules aren’t clear, you can’t be sure your insurance will even be helpful.

Taxi services are better than Uber because the regulations are clear.

Wrapping Up: Insurance That’s Better Than Uber

The insurance uncertainty makes driving for taxi companies much better than driving for Uber. Taxi companies take responsibility for their drivers and their driver’s insurance. Uber, on the other hand, puts all the responsibility on drivers.

Plus, the regulatory market for Uber is so uncertain, unlike the clear rules surrounding taxis. This uncertainty can make insurance less of a sure thing.

While these downsides to Uber are becoming more apparent, taxi companies are evolving to compete and come out on top. So in addition to being safer and a more certain option for drivers, they can become better than Uber in even more ways.

Interested in learning more about the insurance you need as a driver? Request a quote today and find out more.


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