June 29th, 2015
June 29th, 2015 (Toronto) — To your Ontario auto insurance company, carrying paying passengers falls into the same troubling category as carrying explosives or radioactive materials.
Unless you have an OPCF 6A Endorsement as part of your auto insurance policy, you are not insured to carry paying passengers, states Philomena Comerford, President & CEO of Baird-Macgregor insurance.
“It’s a very specific endorsement. That’s what you need. This is the endorsement for which taxi drivers pay dearly; without it, your insurer can deny your claim,” she says.
“Technology does not trump the law. To the insurer, it does not matter if the car was dispatched using an app or dispatched using a telephone. If you’re making money from it, you are carrying paying passengers. Period, full stop. It’s black and white; there are no shades of grey.”
Comerford, a specialist in auto insurance, is gravely concerned that Ontario drivers have gotten the impression that they can work for so-called “ridesharing” organizations like Uber and Lyft with only the personal insurance policy they put on their car.
“People are getting into it thinking ‘Oh, it’s like delivering pizza! I’m going to be an UberX driver!’ They do not understand that they could lose everything they own. If they get involved in an accident and there’s no coverage; they could get a judgement against them putting all of their personal assets at stake plus they could face charges for not being properly insured.”
Uber, she says, “is trying to introduce a thousand shades of grey to something that’s black and white.”
Indeed, section 3 of Ontario’s OAF 1 Standard Auto Insurance application asks this very straightforward question:
“Will any of the described automobiles be rented or leased to others, or used to carry passengers for compensation or hire, or haul a trailer, or carry explosives or radioactive material?”
The answer to this question is either “yes“ or “no.” If the applicant answers “yes” to this question, he or she will almost certainly be declined for personal coverage and will instead be referred for a commercial policy.
If the applicant answers “no” to this question and then proceeds to carry passengers for money, the insurer can take the position that there was either misrepresentation or non-disclosure; potentially facing up to a quarter million dollar fine or even jail time for misrepresentation.
“The problem is that everybody is unaware. It’s been hard getting people to see how important it is. The fact that the City of Toronto is ignoring the insurance issue is maddening: none of these people are properly insured! Injured UberX passengers, pedestrians, cyclists or other motorists could find out the hard way about personally insured UberX vehicle coverage gaps. Toronto has jurisdiction over municipal taxi licensing regulations, but not the provincial Insurance or Highway Traffic Acts.”
The issue of insurance for Uber drivers is now in the spotlight, owing to an accident which took place on June 3rd in Toronto when an Uber car carrying paying passengers apparently ran a stop sign and plowed into a Diamond cab. The Diamond cab is insured with an OPCF 6A Endorsement; the driver of the Uber car had a personal policy with DesJardins.
Joe Daly of DesJardins was quoted in the media after the accident stating, “DesJardins does not insure Uber drivers. We do not insure taxicabs. We do not offer commercial policies in Ontario.”
Comerford points out that a good deal of the confusion has resulted from the fact that Uber holds out an SPF 6 policy as “coverage” for its drivers.
“An SPF 6 provides non-owned auto liability coverage, and there is absolutely no connection between that and the OPCF 6A,” she says. “The purpose of an SPF 6 policy is to protect a corporation whose staff or others use their cars on company business. It does not provide primary coverage; nor does it meet the financial responsibility requirements of the province of Ontario. The critical endorsement is the OPCF6A, Permission to Carry Paying Passengers which must attach to an Ontario Auto Policy OAP #1- Owner’s Policy.”
“Without it, an UberX driver could lose everything they own in the event of an accident.”
Media wishing to interview Philomena Comerford can call
Tel 416-778-8000 ext 2269
Backgrounder: Risks of Misrepresentation
What is the risk of misrepresenting yourself to your auto insurance company – for example, declaring in Section 3 that your automobile will not be used to carry paying passengers, when in fact you are carrying paying passengers? The possible ramifications are significant, and they are printed on every insurance application:
- Warning – The Insurance Act provides that where: (a) an Applicant for a contract, (i) gives false particulars of the described automobile to be insured to the prejudice of the Insurer, or (ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein; or (b) the Insured contravenes a term of the contract or commits a fraud; or (c) the Insured wilfully makes a false statement in respect of a claim under the contract, a claim by the Insured, for other than such statutory accident benefits as are set out in the Statutory Accident Benefits Schedule, is invalid and the right of the Insured to recover indemnity is forfeited.
- Warning – Offences It is an offence under the Insurance Act to knowingly make a false or misleading statement or representation to an Insurer in connection with the person’s entitlement to a benefit under contract of insurance, or to wilfully fail to inform the Insurer of a material change in circumstances within 14 days, in connection with such entitlement.
- The offence is punishable on conviction by a maximum fine of $250,000 for the first offence and a maximum fine of $500,000 for any subsequent conviction.
- It is an offence under the federal Criminal Code for anyone to knowingly make or use a false document with the intent it be acted on as genuine and the offence is punishable, on conviction, by a maximum of 10 years imprisonment.
- It is an offence under the federal Criminal Code for anyone, by deceit, falsehood or other dishonest act, to defraud or to attempt to defraud an insurance company. The offence is punishable, on conviction, by a maximum of 10 years imprisonment for fraud involving an amount over $5,000 or otherwise a maximum of 2 years imprisonment.
 Source: Ontario OAF1 application form