First presented at MB's Transportation Law Seminar
The Sharing Revolution
In his infamous article, "The Sharing Revolution – It's About More Than Just Getting Twice the Value For Half the Cost", Paul Z. Pilzer, an American economist and self-proclaimed 'social entrepreneur', discusses a phenomenon he refers to as "the sharing revolution".1 He calls it the most significant change in the history of the Western world since the nineteenth century when the creation of affordable automobiles forever shaped our society.2 Mr. Pilzer argues that Uber is only a part of this Sharing Revolution in which everything – how we drive, what we eat, where we sleep – is becoming shared by more than one individual in order to halve the cost.3 For instance, renting unused rooms in regular homes via virtual hotel company such as AirBnB can be much less than the price of a conventional hotel room and purchasing a meal from a home turned into a take-out kitchen will likely be cheaper than dining in a restaurant.
It is this sharing revolution that, according to Mr. Pilzner, will surpass our conventional service providers, will allow for cheaper goods and services and ultimately revolutionize our society.4
Although Mr. Pilzner's article is interesting and exciting, there are a few notable shortcomings that he fails to address. For example, what happens when a ridesharing driver gets into a motor-vehicle accident or drives while uninsured or underinsured? Admittedly, these concerns might not be as adventurous as renting a room in a cozy bungalow on the outskirts of Barcelona via AirBnB or as exciting as meeting a complete stranger that quit his full-time job to become a painter by day and Uber driver by night – but they are nonetheless important and must be addressed.
Statutory Accident Benefits – Ontario
In order to legally operate a vehicle in the Province of Ontario, the automobile insurance policy must include the following:
- Third Party Liability Coverage;
- Uninsured Automobile Coverage;
- Direct Compensation-Property Damage Coverage; and
- Accident Benefits Coverage.
In Ontario, the Statutory Accident Benefits Schedule ("SABS") is the provincial regulation of benefits which are standardized among insurance companies. These are "no fault" benefits – meaning accident benefits provide compensation regardless of fault for the insured, his or her passengers or pedestrians involved in the accident in which the use or operation of an automobile directly caused impairment or directly caused damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device.
In August of 2015, the Ontario government proposed significant amendments to the province's no-fault automobile benefits regime, effective June 1, 2016.5
The most notable changes were as follows:
| BENEFIT | PRE-JUNE 2016 POLICY | POST-JUNE 2016 POLICY |
| Medical and Rehabilitation for non-CAT injuries | $50,000 | Combined and reduced to $65,000 |
| Attendant Care for non-CAT injuries | $36,000 | |
| Medical and Rehabilitation for CAT injuries | $1,000,000 | Combined and reduced to $1,000,000 |
| Attendant Care for CAT injuries | $1,000,000 | |
| Non-Earner Benefit | Only paid after a 6-month waiting period following the accident and up to 2 years at a rate of $185 per week. If disability test met after 2 years, the NEBs increased to $320 per week | The old 6 month waiting period replaced by a 4-week waiting period and NEB no longer available after 2 years have elapsed since the accident |
| Income Replacement Benefit | 70% of gross income up to $400 per week | No change |
| Caregiver | Only for CAT injuries - $250 per week for the first dependent plus $50 for each additional dependent | No change |
| Housekeeping & Home Maintenance expenses | Only for CAT injuries - $100 per week | No change |
| Death & Funeral benefits | $25,000 lump sum to an eligible spouse; $10,000 lump sum to each dependent; maximum $6,000 funeral benefits | No change |
In addition, we have also witnessed a change in the forum in which accident benefits are resolved.
The Fighting Fraud and Reducing Automobile Insurance Rates Act ("Bill 15"), is an omnibus bill that received royal assent and was passed into law on November 20, 2014. The proposed purpose of Bill 15 was to help protect drivers and reduce costs and uncertainty by tackling fraud and abuse in Ontario's automobile insurance system. Bill 15 sought to accomplish this by moving the automobile insurance claim dispute resolution system from the Financial Services Commission of Ontario ("FSCO") to the Ministry of the Attorney General's Licence Appeal Tribunal ("LAT").
Coverage
The Superintendent of the Financial Services Commission of Ontario ("FSCO") has approved fleet auto insurance coverage for the following ridesharing companies:
- Uber – policy provided by Intact Insurance – came into effect on July 7, 2016
- RideCo – policy provided by Northbridge Insurance – came into effect on December 1, 2016
All drivers, passengers and vehicle owners in the Province of Ontario using either Uber or RideCo insurance policies outlined above are covered from the moment the app is turned on to the moment passengers exit the vehicle. When the app is turned off, the vehicle owner's personal auto insurance policy applies.
Intact'sAB coverage for Uber drivers
As of July 7, 2016, Intact Insurance provides coverage for Uber drivers through its commercial policy that "kicks in" once the driver has turned on the app. The driver is covered under Intact's commercial policy from the time he or she turns on the app, accepts a ride request, is en route to collect the passenger and until the passenger exits the Uber vehicle. Once the passenger is transported to his or her destination – the Uber driver's personal automobile policy "kicks in" and as such insurance coverage never ceases to apply.
This coverage automatically applies to all Uber drivers regardless of their personal automobile insurance provider and passengers. Therefore, when Uber drivers are using their vehicles for personal use, Intact Insurance, Novex, Jevco and Belairdirect customers are protected as usual under the customer's own automobile insurance policy. However, Uber drivers are required to inform their broker or insurance provider directly that they are participating in ridesharing activity.
If a driver is participating in a ridesharing activity (other than Uber post-July 2016 or RideCo post-December 2016) he or she might not be covered under the policy depending on whether the ridesharing provider has adequate commercial insurance. As for the accident benefits – even though these are no-fault benefits – if the driver participating in a ridesharing activity (other than Uber post-July 2016 or RideCo post-December 2016) does not purchase adequate commercial insurance and subsequently tries to claim accident benefits – he or she might be excluded from claiming certain accident benefits under that particular policy.
GeneralAB Exclusions
Section 31(1)(b) of the SABS outlines the general exclusions for accident benefits claims. The section states as follows:
31. Circumstances in which certain
benefits not payable – (1) The insurer is not
required to pay an income replacement benefit, a non-earner
benefits or a benefit under section 21, 22 or 23,
...
(b) in respect of any person who has made, or who knows of, a material misrepresentation that induced the insurer to enter into the contract of automobile insurance or who intentionally failed to notify the insurer of a change in a risk material to the contract; [Emphasis Added].
Therefore, prior to July 7, 2016, if an Uber driver failed to notify his or her broker or insurer that they were using their personal vehicle for Uber purposes, the insurer was entitled to deny certain accident benefits based on section 31(1)(b) of the SABS, as this could be deemed "material misrepresentation".
The accident benefits that the insurer is entitled to deny for "material misrepresentation" are as follows:
- Income Replacement benefits
- Non-earner benefits
- Lost educational benefits
- Expenses of visitors
- Housekeeping and home maintenance expenses
Immediately upon discovering any potential "material misrepresentation" or other grounds for excluding a benefit, the claims specialists are encouraged to contact legal counsel and discuss the possibility of scheduling an Examination Under Oath ("EUO") to determine whether the same is sufficient to deny certain accident benefits being claimed.
Takeaways
A wise person said once; "With great power comes great responsibility".
This quote is quite applicable to the topic and content of this paper. Although the so-called "Sharing Revolution" has brought with it pragmatism and affordability – there are shortcomings that need to be bridged sooner rather than later in order to avoid potential risks to individuals taking part in this revolution.
The Uber and other ridesharing providers have most definitely brought us alternatives to the conventional taxi services but we have to ensure that proper "traditional" locks such as adequate insurance coverage are in place prior to fully endorsing these new products.
Footnotes
1. Paul Z. Pilzer, The Sharing Revolution – It's About More Than Just Getting Twice the Value For Half the Cost
2. Id.
3. Id.
4. Id.
5. SABS - effective September 1, 2010 (O. Reg. 34/10) and Automobile Insurance (R.R.O. 1990, Reg. 664)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
