Uber busted on to the scene a couple years ago and it has made a ton of waves and headlines since. The taxi cab replacing service has garnered tons of popularity and enthusiastic response. However what you don’t know can hurt you, and my guess is that in a few short years some of the popularity surrounding Uber will turn into notoriety.

The truth is, that as of right now, the current Uber model really isn’t all it’s cracked up to be. In fact, not only might Uber simply not be as financially lucrative as many other articles have bemoaned, Uber might actually ended up royally fucking you over.

Most of the anti-Uber stuff I have read either deals with things like politics, whether Uber is profitable for drivers or not (the answer is no, it’s not), and then the occasional scare blog that you’ll get raped by your Uber driver. The authors of the pieces don’t do themselves any favors because the pieces are so narrowly focused on one minor issue that they downplay the real urgency related to Uber, it’s drivers and their passengers.

And while these might be real issues related to Uber, they aren’t central to the reason you should stop using it. Each driver will wrongly or rightly decide to what extend if at all Uber/Lyft and similar services are profitable for them, and if it’s worth doing. And the rape/murder kidnapping stories are to avoiding Uber, as shark attacks are to avoiding surfing – statistically ignorable.

Trouble with the Law

The real dangers with Uber are legal and liability related. Insurance isn’t sexy and it certainly won’t make any headlines but insurance – or the lack thereof – is the single greatest reason for not using Uber, especially as a driver.

(I am a licensed and very knowledgeable insurance agent, so trust that this isn’t just hearsay coming out of my ass. This is some real advice you can take to the bank.)

Vehicle owners are required by law to have insurance on every registered vehicle. Given that all reputable car insurance companies exclude livery service from their personal auto products, this effectively means that if you are an Uber driver, and you have a regular ol’ car insurance policy, you are driving without insurance, and you are breaking the law.

 

Don’t believe me? Ask your agent for a copy of your auto application. I know, I know. You flipped right to the last page, signed your name, and didn’t read a single line. But if you had, you’d have notice the part of the contract stating you decline coverage for livery, delivery, and other commercial use.

Ways this can screw you:

• Having your driver’s license suspended
• Having your vehicle registration suspended
• Receiving a traffic ticket for a no insurance violation, in addition to the ticket you got for the original reason you were pulled over
• Meeting SR-22 requirements (if you are required to have one, if for example you are required to because of a DUI)
• Huge fines
• Increased future insurance premiums

Insurance and Financial Liability

All the other stuff above is really just annoyances and inconveniences. Granted some of those things can cost you a couple hundred dollars, but ultimately they’ll waste dozens of hours of your time. I suppose time is money though.

But, back on track, Uber driving is a great way to screw yourself financially. Kids, it’s time to review insurance 101. In the United States owners of vehicles are financially responsible and liable for any damage or bodily injury resulting from the use of said vehicles.

What this means is that if you get into an accident and damage another party’s car or property, you are responsible for all costs of repairing / replacing whatever it is you messed up.

Now comes the real juicy stuff. What if in addition to damaging property you ended up injuring someone, or actually hospitalizing someone? Or dare I say it, you paralyze or kill someone?

Either way, if you don’t have insurance, you are screwed. And if you are driving Uber at the time the accident happens, I repeat again, you are screwed.

Uber has gained some negative attention in the past couple years for not covering accidents their drivers get into. The rationale was always that you were a private contractor, not an employee, and while Uber has applied that thinking to their stance on employee benefits, they’ve also applied it to their stance on auto insurance. You are responsible for your own insurance, not Uber. So while many rumors abound that Uber does over you, if that was the case you’d have to ask yourself why they mandate you have coverage of your own.

Extra Notes

Commercial Insurance

The only guaranteed way to have proper liability coverage would be to take out a commercial auto policy that explicitly includes coverage for livery services. Such policies are more expensive and might be with “surplus” carriers.

Financed Cars

If your car is being leased or financed for personal use (pleasure, commute, etc) and you use it for Uber or Lyft, you may actually be in violation of your lease/loan agreement since commercial usage is strictly prohibited. If you do your due diligence and get a commercial auto policy and submit it to your finance company, they’ll surely spot it, and take action against you. So while you might spare your left foot, you may inadvertently end up shooting your right foot.

By The Books

Proper licensing and decals are also important. Certain areas mandate that taxi cabs be registered and have all the proper decals. Uber is a taxi by any other name, like it or not. And if you are performing taxi services without getting all the necessary permits/licenses/registration in place, again, you may be breaking the law and subject to fines.

Passenger Risk

Lastly, you shouldn’t even use Uber as a passenger. Would you knowingly use a roller coaster if you knew the amusement park carried no liability insurance? If not, why would you get in someones car if you knew they did not have auto insurance? Considering 32,000 people in the U.S. die in car crashes each year, and only 3 die on roller coasters in the same amount of time, if you could justify not getting on an uninsured roller coaster, not getting in an uninsured car is should be a no-brainer.

In Summary

Uber drivers not getting paid enough or the prospect that your next passenger might be an axe murderer are certainly issues worth discussing in a different post. However the main reasons for not participating as an Uber driver is because you can get royally screwed in the event of an accident. Life won’t be very fun for you once the injured party lawyers up, and you’re staring down the barrel of a lawsuit with no insurance company standing behind you. Add to this that when the DMV finds out, they’ll also take away your license and your car, you’ll be traveling up shits creek, and it won’t be in an Uber.

Reading Material

http://fortune.com/2015/10/13/uber-crash-insurance/

https://www.policygenius.com/blog/insurance-secret-uber-doesnt-want-know/

http://www.propertycasualty360.com/2015/02/09/uh-ohuber-has-some-coverage-issues