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Who will pay the insurance bill for ridesharing?


The South Australian Government needs to sort out a gap in insurance coverage for ridesharing services like Uber as part of regulating the industry, argues Chris Cudsi.

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Over the coming weeks, the South Australian taxi industry will face significant change.

The State Government has been conducting a review of the regulatory framework governing the taxi industry, with the outcome expected within weeks. This review has the potential to reshape the entire industry.

One significant challenge the State Government will need to tackle is insurance.

With the possibility of new point-to-point passenger services entering the South Australian market – potentially including ridesharing – the ability of insurance to properly protect the public may be diminished. While consumers are being offered more choice, they may also be disadvantaged by the absence of a mandated insurance framework that protects them.

Taxis are forced to pay huge premiums for Compulsory Third Party (CTP) personal injury insurance. In South Australia, this is approximately $4,400 per year – roughly 12 times that paid by the typical motorist. Understandably, this large premium arises because of the increased kilometres travelled by a taxi and the challenging task that taxi drivers face (no two trips are the same).

In the event of a taxi having an accident with a pedestrian, because the vehicle is clearly identified and registered as a taxi, the pedestrian can make a claim on the taxi insurance policy and this will be priced into ongoing premiums for taxis. Currently in South Australia, there is no specific category of insurance under which ridesharing would specifically fall.

In comparison, if a rideshare vehicle has an accident with a pedestrian, there is simply a claim on an average CTP policy as there is nothing to identify it as a rideshare vehicle. Private motorists are then left to absorb this claim cost into on-going premiums for all motorists over time and are therefore not being protected from rising costs.

And what of the consequences for passengers if they are involved in an accident while travelling via a ridesharing service? It wouldn’t be unfair to suggest that the majority would believe they are protected just as they would be in a taxi.

And that leads us to the problems that ridesharing drivers face when operating under a policy that does not adequately cover them. Their policy may be rendered void in the case of an accident while carrying a passenger, in which case the driver or vehicle owner can potentially be exposed to substantial financial loss. The short-term monetary gains that these ridesharing services use to entice drivers are effectively wiped out if an insurer abandons a driver over perceived misleading intentions for vehicle use. Furthermore, an injured passenger may be left to claim for any medical services on their own health insurance and we all suffer higher premiums as a consequence. That begs the question; who’s protecting whom and how are any claims being settled?

It is reported that ridesharing drivers often believe they are covered at all times when engaged in ridesharing activities by either their existing private insurance policy or the insurance provided by ridesharing companies. In reality, drivers face a complex structure of different periods in which some insurance policies apply and some do not.

It’s clear that ridesharing has changed the landscape. However, if it is to be fit for purpose, the necessary regulation needs to be put in place. This will ensure that drivers, passengers and private motorists are not penalised as a result – while an immense foreign corporation profits.

In order to put the needs of South Australians first, the government needs to take this opportunity to address this challenging issue as a matter of urgency.

Chris Cudsi is general manager of 13CABS South Australia – a taxi booking service.


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