Uber’s agreement last week to stop misclassifying its drivers as independent contractors in Alaska raises more than a few fraud issues involving ridesharing.
Whether or not Uber was scamming in Alaska, you have to start thinking about other plots that personal-auto insurers, especially, will need to start watching for.
When applying for auto coverage, rideshare drivers could easily lie that they’re using their car for personal use only. Admitting they do ridesharing could dramatically hike their auto premiums or even lead to coverage denial. So now we have application fraud, and the genesis of potentially expensive claims scams farther down the road (literally).
Next come false claims. Maybe the car crashes while giving a passenger a ride. Two cars are damaged and a passenger gets whiplash. The driver lies that the incident happened while using his car for a personal chore.
He hides the evidence by routinely turning off his rideshare app as soon as he starts the commercial ride, or even before. The app thus doesn’t record anything, giving the driver plausible deniability. The driver then makes the claim with his personal auto insurer, hoping the insurer won’t investigate deeply enough to uncover his lies. The personal-auto insurer could be stuck with large injury and repair claims.
Rideshare firms frequently offer commercial auto coverage of their own. Except that there are serious questions about whether the policies are as comprehensive as the drivers’ personal auto coverage. Deductibles also may be lower for personal coverage. Drivers thus may be incentivized to default what should be commercial auto claims to their personal auto insurer.
Much of the evidence in fraud cases will come from forensics on the driver’s rideshare app. When was it turned on or off, and at what point in the ride process?
This is more than abstract ruminating. Scamming is underway. Rideshare drivers often talk about how they manage scams in blog-related discussions. They also offer each other advice about how to discretely fleece auto insurers in applications and claims. You’ll learn more from experts at Parr Law P.C. in the upcoming fall issue of the Journal of Insurance Fraud in America.
So insurers need to develop plans for dealing with rideshare scams. They’ll need to figure how to ferret out cons during applications and policy renewals. And develop strategies for seeing through dirty claims. Policies themselves will need clear wording.
Insurers also should work with state lawmakers and regulators to make sure the legal infrastructure clearly spells out fraud and liability. Rideshare firms should be involved as well so everyone is working to head off fraud.
Rideshares are exploding in cities around the U.S. Rideshare passengers — and there are many — need assurance that they are properly protected if they’re injured in a crash. Same with other motorists who are hurt, or whose vehicles sustain expensive damage. Coverage and justice cannot be delayed or refused over lengthy tussles about whether a rideshare driver is insured.
About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.