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It’s no news that car insurance is costly, or that driving without insurance is illegal.
For taxi and private hire drivers, the costs can be four to five times higher than what other people pay. More miles driven, more contact with the public, having to drive in and around built up areas and more time spent in often heavy traffic all lead to more frequent claims and therefore higher premiums.
In the UK, the responsibility to insure a vehicle lies with the driver - but insurance can pose problems for the platform they work for, too.
And with the mobility sector struggling with a shortage of drivers, as a platform you need to do everything in your power to keep your platform’s reputation in shape. Not doing so can damage your brand - and make it even more difficult for you to attract new workers.
But how can you ensure your drivers’, their clients’, and your brand’s safety?
Keep reading to learn how modern-day companies in the mobility space are solving the problem.
Why is insurance a problem for the mobility sector?
As a service provider, why is it important for your drivers to have insurance?
Insuring themselves should be in drivers’ own self-interest and benefit - particularly when you consider that in the UK, drivers are required by law to have Hire & Reward insurance: a policy that covers drivers while they transport goods or people.
Well, let’s say an uninsured taxi driver has a car crash involving another vehicle whilst working for your platform. By not having coverage, any legal responsibility for causing damage to the other vehicle will be their liability. But that doesn’t mean your company walks away damage-free.
It’s in your company's interest to make sure all your drivers are appropriately covered. Not knowing whether they are properly insured puts you at a very real risk of negligence suits. This will ultimately:
Cause sudden financial strain on the taxi driver
Damage your entire brand
Expose your business to vicarious liability for the damage caused by the uninsured taxi driver
Ultimately this could lead to you losing the license to operate as a platform
Mobility service platforms must prove that they are fit and proper to run their business (which means doing everything to keep drivers and riders safe, including making sure their drivers are insured). In contrast, allowing your drivers to work without proper coverage is not considered caring for your workers’, and clients’, safety.
What are the solutions?
By now you understand that a mobility service company must be diligent to ensure all its drivers are properly insured.
The traditional solution
Traditionally, taxi firms ask the driver to provide paper evidence of their insurance when they sign up. This is then stored away and only has to be reviewed once a year - a manual process that leaves plenty of room for human error.
With this system, how do you effectively ensure which of your drivers are fully covered, and which are driving with expired or cancelled policies?
Manually asking? Following up? Logging the information into a system? Regularly checking back with them to ensure compliance? And how do you trust that your drivers are always diligent with their insurance coverage?
These questions alone sound like an operational nightmare - and acting on them really can be.
Below, we’ll drive into three different approaches that platforms can take to ensure that their drivers are compliant.
Creating a digital document
Uber needed to make this process quick and seamless - at scale. Their solution? They created InstaDoc, a digital document for each driver that maintains evidence of their insurance.
The problem: this solution was a huge - and expensive - undertaking, even for such a big company. It’s not one that can easily be replicated by smaller firms.
A commercial fleet policy
Another established ridesharing platform came up with a different approach by creating their own commercial fleet policy (this means that they own the vehicle and lease it to their drivers). The insurance falls under the lease, so the company can sleep soundly knowing their drivers are always insured.
The problem: smart as the solution might be, it also raises questions surrounding reclassification. Meaning, if your driver is leasing a vehicle from you, are they still an independent worker, or are they your employee?
The reclassification question is not something that should be taken lightly. Independent workers getting reclassified as employees could completely change your platform’s business model - and could cause workers to lose what they value most: flexibility.
Collective Benefits’ solution: our Commercial Motor insurance
At Collective Benefits, we create insurance that is specifically built for the gig economy. Our creative solutions are built to meet the specific needs of flexible workers, and our courier hire and reward insurance is no different:
Affordable: our fully-digital insurance is usage-based, so your platform will only pay for cover when your driver is on shift
Stay clear about reclassification: your driver will still be able to own their own car
Covered from legal liability: Send your drivers out to the world knowing they're fully covered should any accidents occur and operating within the confines of the law
Facilitates onboarding: Time is money. Our mobility insurance solution makes the onboarding process more seamless by taking out operational friction, such as the provision of paper evidence. This avoids having independent workers drop off in between onboarding and completing their first shift
Attract and retain employees: Insurance is expensive. By providing it, you’ll not only attract more drivers, but encourage them to stay loyal too
As a mobility services provider, offering your workers ongoing support and safer work conditions is key to your business and also expected by both your workers and UK laws. We make it easy for you to protect your workers, with:
Usage-Based Public Liability Insurance (covering your workers if they accidentally injure someone or damage another person's property while they're completing a job).
Sick and Injury Pay