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Are you really covered in an Uber?

March 4, 2016

The South Australian Government is currently reviewing the regulatory framework that governs ridesharing services, such as Uber. Some argue that the outcomes from the review could result in significant changes to the ridesharing and taxi sectors.

Insurance has been flagged as key issue in the review.

The facts

  • Although consumers have more choice when it comes to choosing a taxi or ride sharing service, they are arguably disadvantaged.
  • This is because a compulsory insurance framework does not exist to protect them if they choose a ridesharing service such as Uber.
  • Taxis in South Australia pay big premiums on Compulsory 3rd Party personal injury insurance (CTP). CTP costs around $4,400 per annum, which is about 12 times the amount an average motorist pays.

Case Study – What happens if a taxi hits a pedestrian?

  • If a taxi driver covered by CTP hits a pedestrian while on the clock, the pedestrian is generally able to claim on the taxi’s policy.
  • A key element of the claim is that the taxi can be clearly identified as a registered taxi vehicle.
  • The cost of this claim is then absorbed into future premiums by taxi drivers.

The insurance gap caused by ridesharing

As ridesharing is a relatively new service in Australia, there are some gaps in the insurance framework. These include:

  • Right now in South Australia, ridesharing vehicles do not fall under a particular ‘ridesharing’ insurance category.
  • There is no way to identify a ridesharing vehicle, which means they must be covered under a general CTP policy.
  • If a private motorist claims on a general CTP policy, this is priced into the premiums of all private motorists, which means the public receives limited protection against increased insurance costs.

The complexity of ridesharing insurance policies also makes it difficult to discern when a driver is protected. For example, a driver who has a collision while a passenger is in the car may not necessarily be covered under their policy.

Many drivers do not realise that there are specific times and activities that preclude them from being protected, which arguably puts drivers and passengers at great risk.

Results of the review

We look forward to discovering what the South Australian Government reveals in its review, and certainly believe now is the time to adapt insurance policies to the new wave of ridesharing services, which appear here to stay.

Need your Motor Vehicle Insurance Reviewed?

If you’d like your Motor Vehicle Insurance policy reviewed, please contact our insurance brokers. We can assess whether more affordable options are available, and whether you have the right level of motor vehicle insurance cover.

For the full article this blog is based on, please head to INDAILY, Adelaide’s Independent News.

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