How Uber Found The Perfect Insurance Partner: Metromile

Uber came under fire last year for gaps in its drivers' insurance coverage after a six-year-old girl was struck and killed by a driver between fares. Now, the company is hoping that a newly announced partnership with usage-based auto insurance provider Metromile will be the solution.

Metromile will offer variably priced, pay-per-mile auto insurance for drivers who use Uber's ride-share platform in California, Illinois, and Washington starting in February. The partnership is intended to address the concerns about gaps between personal auto coverage for Uber drivers, who are independent contractors driving their own vehicles, and Uber's $1 million commercial liability coverage. For the first time, Uber drivers who enroll in the plan will be covered during the times they are driving for personal reasons, as well as when they are waiting to receive requests from riders.

Uber drivers who install Metromile's Metronome dongle into their on-board diagnostic ports will send driving data to Metromile, which can distinguish between miles driven on a ride-sharing trip, when drivers are covered by Uber commercial auto policy, and when they are driving for personal reasons or when they are waiting to receive requests from riders. Metromile will only charge Uber drivers to insure miles driven for personal reasons or when they are waiting for fares.

"Uber drivers click a button on their phones to say when they are accepting rides and when the ride is over," explains Dan Preston, Metromile CEO. "We built special services where we are able to ping their server, and it sends the information we need to know, so we can see the miles we need to subtract from the miles driven. It’s completely seamless for an Uber driver; the only difference is they are being insured by Metromile.

Other insurers have introduced special products for ride-sharing drivers, but this is the first expressly supported by Uber. The difference between this and other products, such as one Farmers introduced in Colorado, is the cost structure, says Preston.

"Basically, ride-share drivers will pay 25 percent more" under the Farmers program, Preston claims. "The important distinction is we are not charging our customers more for being rideshare drivers. You have to go to a specific portal if you are an Uber driver, so that we know to check for miles we need to subtract. But it's the same product, you get the same coverage limits and the same rates."

The three main components of the agreement were technical, legal and regulatory, Preston continues. There is the technical integration -- basically our servers talking to each other, making sure we know which miles to subtract for which customer," he says. "That's reasonably complex because there's a lot to each of our systems."

But getting data correctly formatted and synchronized for a daily exchange wasn't the biggest challenge, Preston adds.

The hardest part of all this was the contracts and making sure we went through the right process with regulators and got it right. There's a lot involved, there are a lot of stakeholders," he says. "You have to make the right product for rideshare drivers, and build the right product to be supported by regulators. They were very supportive.

Metromile has been offering insurance by the mile since 2011. Unlike most insurance telematics programs, Metromile doesn’t use any behavioral metrics, such as speeding or hard braking, to determine rates. Rather, rates are determined through a combination of standard factors plus actual miles driven. The average Metromile customer drives 5,000 miles per year and saves 60 percent compared to other auto insurance programs, Preston says.

Uber drivers also will be able to access services and features from Metromile, including commute optimization, fuel insights, engine diagnostics and access to on-staff Metromile mechanics. Drivers in San Francisco and Chicago also can also receive text notifications to help them avoid street sweeping violations.

“Insurers need to be thoughtful about how rideshare drivers interact with their services,” Preston says. “It has to be a seamless experience that doesn’t require a lot of extra work. That’s something you learn after being in the technology world for a while. That’s what Uber is doing as it replaces taxis."

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