An Essential Guide to Uber and Auto Insurance

Did you know that your motor insurance policy doesn't cover you as a Private Hire Vehicle (PHV) driver?

Yes, this means that you need a PHV insurance policy to drive your Uber legally. Contrary to what most new Uber drivers believe, Uber does not offer this insurance to its drivers.

However, if you are thinking of becoming an Uber driver and you are wondering what PHV insurance covers and why it is important, keep reading.

This guide will discuss PHV insurance, its coverage, costs, and what insurance coverage Uber offers.

So, let’s get right to it.

What Every Uber Driver in the UK Needs to Know

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Why You Must Have Private Hire Vehicle Insurance

If you carry passengers who have pre-booked a ride either through an app or phone, you must have Private Hire Vehicle insurance. This insurance, also referred to as Hire & Reward insurance, is legally required and applies to all PHV drivers, regardless of the rideshare operator you are driving for.

It is also important that your PHV insurance policy has the right level of public liability insurance coverage, as this will cover any claims made by members of the public against you.

For example, if you are found to be at fault for an injury claim, your public liability insurance coverage will pay any expenses. While each PHV insurance policy is different, most of them usually cover the following:

Passenger liability
Public liability
Third-party liability
Personal injury
Legal expenses

However, this PHV insurance does not cover unnamed drivers on the insurance policy, general wear and tear, driving under the influence, or unapproved vehicle modifications.

It also doesn’t cover drivers picking up passengers from the street.

Alongside the PHV insurance, you also need a personal motor insurance, also referred to as Social, Domestic & Pleasure (SD&P) insurance. This SD&P insurance allows you to use your vehicle for personal use, and it protects you when you’re on personal drives or in between shifts. Besides, you cannot substitute the former for the latter and vice versa – if you drive passengers with only SD&P insurance, your coverage will be invalidated if you are caught or an accident happens.

Levels of PHV insurance

Uber recently released a list of approved insurance providers, which include Nelson, Antilo, Zego, Acorn, and Inshur. When you use these approved providers, your verification process as a new driver will be sped up because Uber's Instadoc system allows them to get the insurance documents directly from the company.

Additionally, these UK PHV insurance providers usually offer different types of PHV insurance coverage, depending on your needs:

Third-Party Only Coverage: This covers only damages to other vehicles, property, or people, including your passengers.
Third-Party, Fire, and Theft Coverage: This includes third-party coverage and protection in case your vehicle is stolen or damaged by fire.
Fully Comprehensive Coverage: This covers third-party, fire, and theft alongside damage to your vehicle.

You can also include extra add-ons to your insurance policy, like:

Legal protection
Public liability
Replacement vehicle
Breakdown coverage

Cost of Getting an Uber PHV Insurance

Because of the increased risk, the cost of PHV insurance is typically higher than that of standard car insurance.

Typically, a standard car insurance policy costs about £600, while a fully comprehensive PHV insurance policy can cost up to £3,500 annually. However, this cost differs depending on the level of coverage you choose, the type of vehicle you drive, and your driving history.

For example, a PHV driver with a good driving record may pay up to £1,600 for an annual policy or £180 for a 30-day policy.

Flexible drivers who opt for the Pay-As-You-Go (PAYG) insurance policy pay a base monthly fee plus an hourly charge of about £1.50 when they are logged into the Uber app. Other factors that can influence the cost of your insurance include:

Driver’s age
Driving experience
Annual mileage
The location where passengers will book most trips
Prior driving offense
Claims history
Vehicle passenger capacity
Vehicle security features
Add-on coverage

Tips on Getting the Right Insurance Coverage

If you are looking to reduce the cost of your insurance, you can use some tips outlined below.

Shop around and compare quotes from different PHV insurance providers.
Opt for the annual payments to avoid paying interest on the monthly payments.
Install immobilisers and dashcams to improve the security of your vehicle.
Install a black box device to enable the insurance company to analyse your driving habits accurately —the safer you are as a driver, the lower your premiums.
Use an Uber-approved vehicle model.
Pay for only important extras, like public liability, and avoid unnecessary expenses.
Be conscious of the location from which you book your trips- driving in metropolitan areas increases your premium.
Park your car in a safe place.
Increase your voluntary excess, but make sure you can afford to pay the amount if you need to make a claim.

What Insurance Does Uber Provide?

Uber does not offer PHV insurance to its drivers, but it offers some limited protection, which does not substitute for PHV insurance.

Uber offers Partner Protection through Allianz, which provides coverage for specific events that occur while a driver is on a trip and other events when off a trip.

For example, if you get into an accident while on a trip, Uber covers medical expenses, hospitalisation, and injury, as well as death and funeral payments. Besides, in the unfortunate event that you get a permanent disability because of the accident that occurred while on a trip, you will get a lump sum payment.

Uber also offers severe sickness and injury compensation and a maternity/ paternity one-off payment.

Basically, Uber's coverage is more of a welfare coverage than road insurance, as Uber drivers are independent contractors. Besides, Uber doesn't cover damage to your car or any off-app driving accidents.

What Happens If You Drive Without a PHV Insurance?

It's not worth the risk of driving for Uber without valid PHV insurance. Doing so is a criminal offence that can result in the seizure of your car or the revoking of your licence.

You may also be required to pay a significant fine and will most likely be banned permanently from driving for Uber. The potential risks and consequences are too serious for you to overlook.

To Wrap It Up

To drive for Uber in the UK, you need more than just a good car and a smartphone. You are required by law to get the right insurance before you start driving commercially. While Uber provides some sort of protection, it is not a substitute for Private Hire Vehicle insurance.

This means that you need to invest in the right insurance to enable you to always drive protected.