SACRAMENTO — Ride-sharing company Uber and an unusual pay-by-the-mile auto insurance company have teamed up to make sure that Uber drivers have either personal or company coverage at all times.
The arrangement, which has been approved by state insurance regulators, seeks to close what critics call a "coverage gap" that could at times leave Uber drivers and passengers, other vehicle occupants and pedestrians unprotected by insurance in an accident.
State law requires that Uber and its competitors provide drivers with as much as $1 million in liability coverage, but only from the time a match with a passenger is accepted until the rider leaves the car.
San Francisco insurer Metromile Inc. is offering a new personal insurance product to Uber drivers to cover the miles they drive on their own time or waiting to be hooked up with a paying passenger.
The combination will make sure that the drivers are covered at all times whether by Uber's company insurance or by their own Metromile policies. As a result, Uber drivers won't have to worry that their personal insurance policies would not cover them because their vehicles are sometimes used for commercial purposes to carry fare-paying passengers, who grab rides by using an Uber smartphone application.
Uber and Metromile have come up with the ride-sharing industry's "first technology solution" that "strives to provide continuous, seamless insurance coverage for Uber driver partners," the companies said in a statement Wednesday.
The Metromile policies are backed by National General Insurance Co., a California-licensed insurer with an "excellent" rating from A.M. Best, which measures the strength of insurance firms.
The Metromile policy, said Andrew Macdonald, Uber's San Francisco regional manager, is a market solution that offers a "flexible insurance option designed specifically to the needs" of Uber drivers.
California Insurance Commissioner Dave Jones, who gave the go-ahead to start selling the innovative new policy for Uber drivers, encouraged other insurers to develop similar coverage plans that would give ride-sharing companies more choices.
The Metromile product ensures that all extra coverages, including physical damage or theft of an Uber driver's car, will remain in force during the period when the Uber phone app is on but no passenger has been identified, Jones said.
Metromile policies will be available for sale to Uber drivers in California, Illinois and Washington state in February, said Chief Executive Dan Preston.
He predicted that Uber policyholders, who drive their cars on personal policies less than 12,000 miles a year, would pay substantially lower premiums that they would with conventional auto insurance.