Metromile aims to fill UberX’s insurance gap

Metromile a San Francisco starup "pay per mile" will become the first insurer in California

to cover UberX drivers for both their personal rides and the time they are waiting for requests from paying passengers.

“For the first time in California, drivers for UberX will have a (policy) that covers Period 1, the time between when the driver turns on the app and announces to the world that they are available to drive someone somewhere and the moment in which a rider indicates they want to be picked up,” said state Insurance Commissioner Dave Jones, whose office approved the new policy.

Uber, like other ride-hailing companies, complies with state law requiring $1 million insurance to cover the time from when a driver accepts a ride request until the passenger exits the car. But Period 1 has been a persistent issue for the app-based ride service and its competitors, leading to criticism of an insurance gap.

“We are solving a fundamental problem for ride-(service) drivers,” said Metromile CEO Dan Preston. “They now know they have insurance to cover them throughout a ride.”

Metromile uses a small device called a Metronome that plugs into a car’s diagnostic port, located under the dashboard, to track how many miles a car drives. It charges drivers a set monthly fee — for instance, $15 a month — plus a per-mile rate, such as 5 cents a mile. The approach yields lower rates for people who drive less often, it said.

Initially the UberX coverage will be available in California, Illinois and Washington state. Metromile, which started in 2011 and operates in four states, declined to say how many customers it has. The deal could bring it a flood of new users — something Preston said it is ready to handle. In a report last week, Uber said it has about 50,000 drivers in California.

“Metromile has created an innovative product that responds to the needs of the insurance marketplace,” said Uber regional general manager Andrew Macdonald in a statement. “Driver partners using Uber’s ... platform will soon have a new flexible insurance option that is designed specifically for their needs.”

Under a technology agreement between Metromile and Uber, the ride-hailing company’s app will send Metromile real-time reports on drivers who have agreed to the arrangement so they won’t be billed for insurance when they are picking up or driving passengers. “We worked directly with Uber to build technology integration that allows us to know for sure which miles are being driven for Uber,” Preston said.

Metromile’s device in conjunction with a smartphone app can also give drivers insights into their fuel use and engine diagnostics, and even can notify drivers in San Francisco if they need to move their cars to avoid a street-sweeping ticket.

Insurance has been a consistent problem for Uber and other ride-hailing services that rely on drivers using their own cars. Almost all personal policies exclude commercial activities, such as driving passengers for hire, while commercial policies are dramatically more expensive.

It was reportedly during the Period 1 that an UberX driver struck and killed a 6-year-old girl on New Year’s Eve in San Francisco a year ago.

California legislators addressed this issue last year by passing AB2293, which takes effect July 1. It requires ride-service Period 1 coverage of $50,000 per person for death and injury; $100,000 per incident for death and injury; and $30,000 for property damage with excess coverage of $200,000. Although Uber, Lyft and Sidecar initially fiercely opposed the bill — and Uber even unleashed an attack campaign against its author, Assemblywoman Susan Bonilla, D-Concord — they accepted a compromise version with lower limits.

Jones, the California insurance commissioner, said several other companies have expressed interest in creating new products to cover the Period 1 insurance gap, and that his office will make it a priority to review such applications quickly.

Preston said Metromile isn’t currently talking to any other ride companies about similar deals.

Backed by $14 million in venture funding, Metromile was started in 2011 and said it is the only U.S. company with the pay-per-mile approach, although some others bill based on information about vehicle use. Currently available in Washington state, Oregon, Illinois and California, Metromile plans to be in all major U.S. metropolitan markets within a year, Preston said.