Peer-to-peer driving service Uber announced Friday they're closing an "insurance gap" to cover their on-demand drivers even if they don't have a passenger aboard.
Uber is a ride-sharing company that allows users to hail a cab from ordinary citizens or professional drivers through its smartphone app. When it first launched, Uber only partnered with professional town car services. (Via CNN)
But the company expanded its service in 2013 to offer taxi-like services through average joes. The New York Times reports, "The so-called community drivers were required to have their own insurance; Uber also provided an insurance program that covered the drivers’ liability from the time a driver accepted a request to the completion of a trip."
In a post on its blog Friday, Uber announced a new policy: if a driver's personal insurance doesn't cover an accident during those intermediate periods between rides, the company will provide coverage. $50,000 per individual for bodily injury, $100,000 total for bodily injury, and $25,000 for property damage
Uber also said in its announcement the company is seeking to eliminate the ambiguity of their insurance policies.
According to Businessweek, "There has been no shortage of ambiguity so far, with fundamental differences in the way ridesharing companies and insurers see the situation. Insurers insist that anything with a hint of ridesharing isn't covered."
One of the main reasons for the new policy is a tragic incident involving an Uber driver. That driver hit and killed a 6-year-old girl in San Francisco on New Year's Eve. (Via KGO-TV)
The little girl's family sued Uber and the company banned the driver. But Uber denied insurance protection to the driver and the girl's family because the driver didn't have any customers in his car.
Forbes reports Uber's CEO Travis Kalanick said in a conference call the new policy also "gives legislators and regulators the confidence in knowing the public interest is being protected while a lot of the rules are being figured out, and allows them to be thoughtful while they work through their legislative options."
Lyft, a competitor peer-to-peer ride service, also announced this week they would be offering similar insurance coverage for its drivers.
According to Businessweek, Kalanick said while Uber's new insurance policy doesn't fully answer all the questions about insurance and ridesharing, he believes insurance companies will come up with new products for ridesharing drivers.