Uber driver insurance program not workers comp, but provides similar benefits

BOSTON — A risk management official for Uber Technologies Inc. said the rideshare company’s program to provide benefits for injuries sustained by its drivers while working on the Uber app is an important first step to establishing benefits for these drivers, but affirmed that the program is not a workers comp program and that Uber believes it correctly classifies its drivers as independent contractors rather than employees.

San Francisco-based Uber last year launched an insurance program to give its drivers access to Driver Injury Protection, offered through Aon P.L.C. and OneBeacon Insurance Group, which is now available in 40 states and the District of Columbia, Brad Nail, Uber’s senior risk and public policy manager based in Washington, told the National Association of Insurance Commissioners’ workers compensation task force on Monday at its summer meeting in Boston.

“I think we start by identifying that there is an opportunity — there is in fact some need — around benefits for Uber drivers, as an example,” he said. “Some of those drivers can benefit from insurance coverage to protect them from work-related injuries. Uber drivers are classified as independent contractors and thus do not receive traditional workers compensation.”

The company worked with OneBeacon to create a policy tailored to the needs of Uber drivers, Mr. Nail said.

Uber drivers are covered when they log onto the app, when they are en route to pick up passengers and when they are transporting passengers, said Tedd Merrill, New York-based senior vice president for sharing economy with OneBeacon.

The program helps pay medical bills and replace normal earnings in case of an accident. The insurance policy covers accidental medical expenses up to $1 million and provides accidental disability benefits up to $500 per week, death benefits of up to $50,000 and survivor benefits up to $150,000, Mr. Merrill said.

The program, which some experts have deemed workers comp-like, was designed around a usage-based pricing model. The coverage costs drivers 3.5 cents per mile but is cost neutral for the drivers because Uber raised its fares 5 cents per mile across the board, Mr. Nail said. Uber generally retains about 25% of the fares it collects, so this amounts to the driver receiving an extra 3.75 cents per mile that the driver can either retain or use to pay for the insurance, which Uber prefers them to do, he said.

“This way the cost does not have to be a factor in the driver’s decision to opt in for the program,” Mr. Nail said, adding that Uber has a limited role in this transaction, with the drivers interacting with broker Aon. “We don’t make any money off of this transaction. It’s between the insurer and insured. We merely pass through the premium from the insured to the insurer without retaining any of that premium for ourselves.”

Uber makes it clear on the policy documents that this is not a workers comp policy, he said. “We don’t want there to be any confusion among those who purchase it about the benefits they are receiving,” he said. “It’s very clear that it’s not a workers comp policy even though some of the benefits that are provided are similar in natur