By Typhaine Letertre, Project Manager, Communications

As a broker, have you ever had the opportunity to meet the auto insurance needs of an UberX driver? The lack of clarity on this issue within the industry is truly puzzling! In order to address this issue proactively, you are encouraged to read the article on this topic in the June issue of Liaison magazine. Richard Giroux, a professional liability expert at Courmark, shares his views and offers some valuable advice to protect you as well as your clients. Enjoy the article!

AN ARTICLE BY THIBAUT TEMMERMAN

UberX, which uses mobile applications to put drivers and users of transportation services in contact with each other, is a direct source of competition for the traditional taxi industry. A number of countries and cities have taken steps to prohibit the company from operating on the grounds that it engages in "unfair competition." But the ban on using one's personal vehicle as a taxi could actually expose drivers and brokers to significant risks.

Thanks to new technologies, the sharing economy is growing by leaps and bounds—faster, in fact, than our legal system can address the issues being raised. In this regard, Uber is no exception. Created in 2009, the company is present in more than 250 cities worldwide; UberX is among the services it offers. The underlying principle is very simple—and highly attractive!

Expanding the principle of car sharing, Uber allows drivers to offer transportation services to other individuals. The route is agreed on in advance using a dedicated mobile application, while the transaction is carried out via an automatic transfer. For Uber, this is no less than a "transportation revolution," a way of making "cities more accessible." Available in Montreal since fall 2014, UberX has sparked a wide range of reactions, particularly from the municipal government and the provincial transport ministry, both of which view it as illegal.

INSURANCE COVERAGE IS LACKING

The debate over drivers' insurance coverage has raised a number of important issues. Richard Giroux, director of Courmark Inc., an RCCAQ subsidiary, notes that auto insurance policies in Quebec have at least three provisions that explicitly prohibit insured vehicles from being used as taxis or any other type of chauffeured vehicles or used for illegal transportation or commercial purposes.

"The insurer might not ask questions if the damages are less than $500 but what would happen if the claim amounted to several thousand dollars? In that case, what insurer would sign a cheque without investigating? Even worse, what would happen if an accident occurred outside Quebec, for example in Ontario or the US, and the UberX driver using was found liable for injuries to non-Quebec resident third parties? If the insurer were to find out that the client was using his vehicle as part of UberX, it might apply one of the provisions to refuse reimbursement," says Richard Giroux. "That could be catastrophic for the insured." Although Uber does specify the conditions under which its drivers are covered in the US, it claimed that its insurance policies are confidential in a case before the Ontario Superior Court of Justice in February 2015.

BROKERS ARE ALSO AT RISK

As an expert in professional liability insurance, Richard Giroux notes that brokers are also vulnerable. "If a client calls me up and says she wants to become an UberX driver, I'm required to report that to the insurer. That means the insurer would in all likelihood cancel the policy due to excessive risk; the broker would then have to purchase coverage from another company. The problem is that so far no insurers have expressed an interest in covering this type of risk. So brokers could end up with dissatisfied clients."

And that's not all. According to Richard Giroux, if their client is not insured and defended, brokers could be targeted by their client's lawyer, who might claim, for example, that they did not clearly indicate that using a personal vehicle as a taxi was not covered under the policy. To plan for these contingencies, Mr. Giroux says that brokers should "always be proactive in dealings with clients and should provide clear recommendations about the risks involved. That way, brokers protect not only their clients; they also protect themselves from any potential legal implications. That's what I always advise my own clients."

Mr. Giroux is at pains to explain the lack of clear information on insurance issues raised by UberX. "In my opinion, the industry has been far too quiet. As far as I know, no insurers have said what action they would take. It's like they're waiting for some catastrophe to happen. No one seems to want to run the risk of speaking out." The AMF, however, has raised the matter of insurance policy exclusions but simply asked clients to contact their brokers or insurers in order to avoid potential disputes. This lack of precision leaves the door open to conflicting interpretations, notes Mr. Giroux.