For those who think being an Uber driver is the quick road to some easy cash, it makes sense to crunch some numbers first, and weigh the actual – and potential – costs of ridesharing. First off most companies like Uber take a percentage off the top of any fares collected – that’s 20% in Uber’s case…plus a $1.50 ‘Safe Rides’ fee. CAA estimates that it costs the average car owner $0.54/km to run a typical, mid-sized vehicle – or $4.17 per average trip. So subtract that too. Then there’s HST which Uber drivers are also responsible for collecting and submitting.
According to an article published by MetroNews (Toronto. September 15, 2015)2, out of the $23-$25/hour rate that Uber claims their drivers earn, most drivers only pocket about $11.50/hour after expenses and taxes. Still, many drivers find these costs acceptable and enjoy the flexibility and income that ridesharing offers, and that’s great!
What’s NOT great is that many drivers are shouldering an unacceptable amount of personal financial risk by driving without proper insurance protection.
It is important to be aware that as soon as you start charging a fee for your driving services, you are no longer covered by the standard personal auto insurance policy. Transporting paying passengers opens you up to all kinds of liability issues, costs and claims. This is why professional cab drivers are required by law to carry comprehensive commercial insurance policies.
If you drive for a ridesharing company or a transportation network without proper insurance, even ‘small’ accident can result in personal financial ruin.
Ridesharing without insurance: an unacceptable risk
When it comes to weighing ridesharing revenues with the risk incurred by driving without adequate insurance coverage, here are some numbers you’ll want to keep in mind:
Part-time Uber drivers can expect to earn about $3,000-$4,000/year (before taxes, fees and expenses).
Average cost of one auto collision/liability claim involving property damage: $3,0731.
Average cost of auto/collision/liability claim involving bodily injury: $14,653 (US)1.
And that doesn’t include fees, fines, legal settlements, lawsuits, disability, lost wages, towing costs and more. According to the Insurance Research Council:
The average cost of a motor vehicle accident in the Greater Toronto area is at least $25,000. 1
Even a minor fender-bender can end up costing tens of thousands of dollars in damages, losses and liability. An accident resulting in personal injury, disability or death could leave you on the hook for millions.
The good news is that Aviva Canada now offers an insurance product specifically for the protection of part-time ride-sharing drivers. The cost? About $700-$865 per year added on to your existing auto policy.
Ridesharing insurance: affordable peace of mind
It’s clear that ridesharing, without the proper insurance coverage, is simply not worth the risk. Even getting rear-ended could end up costing you triple what you would pay for insurance (and that’s probably the best case scenario).
So how much does peace of mind cost? Not very much, especially when you consider the alternatives as outlined above. Here’s the breakdown.
Approximate cost of ride-sharing insurance protection if driving 10 hours/week: $692.* Approximate cost of ride-sharing insurance protection if driving 20 hours/week: $865.*
At 10 hours/week at an Uber rate of $25/hour, it would only take about three weeks to pay for your insurance (or six weeks if you factor in expenses and taxes).**
At 20 hours/week at an Uber rate of $25/hour it would take less than two weeks to pay for your insurance (or four weeks, if you factor in expenses and taxes).**
Either scenario is far more affordable than paying for any kind of accident out of your own pocket, especially when personal injury and liability claims are on the table. And it’s a small price to pay for peace of mind.
*Prices may vary depending on location, driving record, vehicle, etc. Please CALL Excalibur Insurance for a quote. **Payback period may vary depending on cost and location. Please CALL Excalibur Insurance for details