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Ride hailing insurance risks. Over the past few years, Lyft and Uber, popular ride-hailing companies, has expanded its operations into a handful of Canadian cities. While drivers and passengers cite ride-hailing as a cheaper and more convenient alternative to traditional taxi services, the industry is not without risks.

British Columbia has specifically has been slow to approve ride-hailing the provincial government has promised to have services operational in British Columbia before Christmas. According to Global News, BC Liberal MLA Jas Johal says recent changes to the application process by the Passenger Transportation Board will make it impossible for the government to fulfill that promise. But it looks like BC drivers may have the opportunity to become a transportation network services (TNS) driver early next year.

Risks associated with becoming a ride-hail driver

Before signing up to become a ride-hail driver or using the service as a passenger, it is important to understand how ride-hailing works and the risks associated with the industry.

How does it work?

TSN companies connect ride-seekers to drivers through a mobile app. After a match has been made, drivers pick up their passengers and transport them to their desired destinations. Fares vary by city but typically consist of a base fare and fees per kilometres and minutes driven. Passengers have to enter credit card information into the app before rides can be requested. Their credit cards are then charged for the rides once they reach their destinations, and the rideshare company compensates the drivers. No cash is ever exchanged.

Becoming a TSN driver, especially through Lyft and Uber, has become a popular option for those seeking full- or part-time employment. This is because the company allows its drivers to create their own hours. In BC there are specific rules governing TSN drivers under ICBD regulations.

Personal auto policies don’t cover commercial activity

Under most standard personal auto policies in Canada, drivers are prohibited from engaging in commercial activities As it relates to ridesharing, personal auto insurance policies are not designed to provide adequate coverage when vehicles are used to transport passengers for compensation.

What are the requirements to drive for a ride-hailing company?

The ride-hailing company is responsible for ensuring drivers and vehicles meet Passenger Transportation Board requirements, as set out in government regulations. These include:

  • a Class 4 (restricted) commercial driver’s licence issued in B.C.
  • a criminal record check
  • a vehicle that meets all requirements and has passed a vehicle inspection
  • a commercial driving record, commonly known as an (N) print or National Safety Code abstract, which you can request online or by phone at 1-800-663-3051 or 604-661-2800

Misleading your insurer can have consequences

Misleading your insurer—accidentally or purposely—can result in serious implications. There are two main ways drivers often mislead insurers:

  1. Providing inaccurate information on insurance applications. Most applications for auto insurance include language on how a vehicle will be used—specifically, whether a vehicle will be used for commercial or personal use. Ride-hailing drivers who lie about their vehicle’s commercial use on insurance applications could have their policies voided. Additionally, drivers could face potential fines or penalties if they are misleading on their insurance applications. While penalties may vary from province to province, fines can be as high as $250,000 for the first offense and can even include jail time.
  2. Failing to notify your insurer of a change in risk. When you become a ride-hail driver, there is a material change in risk associated with your auto policy because you are transitioning the way you use your vehicle—from personal to commercial use. When that happens, you are required to notify your insurer, and failure to do so could result in your policy being voided.

What happens in the event of an accident?

Both drivers and passengers are at risk if proper insurance is not purchased for the purpose of the ride-hail model. If a passenger gets into a vehicle that is not properly insured and that driver gets into an accident, you risk having no access to insurance protection, accident benefits or potential compensation for injuries. Passengers would have to take the driver to court in order to receive restitution for any legal or medical costs—a costly and time-consuming process.

How to reduce your risk

For passengers, mitigating the risks associated with ride-hailing is simple. Before a ride, passengers should ask the driver to provide proof of commercial insurance, as this is the only type of insurance in Canada that can sufficiently protect you in the event of an accident.

For those considering becoming a driver for any TNS company—there are a number of precautions you can take to limit your risk, including the following:

Obtain commercial coverage. While this type of insurance is typically more expensive it’s the only way to guarantee coverage in the event of an accident.

Disclose any pertinent information to your insurer. By letting your insurer know of any changes in how you use your personal vehicle, you will avoid potential fines and gaps in coverage.

Every province has slightly different laws and regulations as it pertains to insurance. If you’re looking to work as a ride-hail driver in British Columbia, contact Reliance Insurance Agencies, Ltd. to talk through your options and to ensure that you are properly covered.


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