On-demand horror stories have become so common that the world is desensitized. Some people say that “most Airbnb rentals go well, but there are horror stories,” and there sure are, from the home-turned-brothel to the entire site aptly named “Airbnb Hell.” How about the guy who used an Uber as a getaway car, the intoxicated passenger beating his driver or the passenger that threw a bottle at an Uber driver’s head? Though it’s not common, it’s horrifying. And the insecurities and anxieties around Uber and Lyft swirl around the fuzziness in the protection for passengers and drivers alike. It gets worse; most media attention (understandably) focuses on the most egregious problems, when traffic accidents, home mishaps and broken furniture leave many facing dire financial circumstances. Ride and home-sharing companies promote the ability for individuals to make tens of thousands of dollars a year, but the lack of proper protection will turn modest profits into significant losses.
While most on-demand platforms provide some sort of insurance coverage for their participants, these policies are not all-inclusive and are accompanied by onerous complications. In fact, let’s put it bluntly; until a homeowner finds out that their Airbnb has been trashed, or an Uber driver rear-ends someone, only then will many find out that things will get much worse.
Take Mike from Cleveland. Mike left his day job five years ago to pursue a full-time career driving people around in his own car. It’s an awesome job he loves; he’s a 5-star rider driving a car he loves, regarded as a kind of unofficial ambassador of the ridesharing community. The standard bearer for the industry, if you will. However, his tenure almost came to a (literal) screeching halt in late 2015 when he was driving a passenger down the highway and, out of nowhere, a Corvette Stingray slammed the back of his car at a hundred miles-an-hour.
“We started spinning, we hit a concrete barrier, then boom, next thing I know, we were going sideways, and when we hit this patch of ground, the vehicle flipped upside down,” said Mike.
It was a hit and run, both a horrifying experience and an insurance quagmire. The Corvette driver fled the scene, but was later caught and charged by police. He still awaits trial. Miraculously, both Mike and his passenger escaped the accident unscathed, but a trip to the hospital and subsequent physiotherapy to treat minor backaches left Mike with almost $4000 in medical bills––a debt he’s been forced to carry on a credit card since the accident.
The Corvette driver’s insurance company replaced his vehicle, but Mike lost two weeks’ income waiting on both his replacement vehicle and his nerve to start ridesharing again. Mike’s attempt to recover compensation for the accident will have to wait until a verdict is reached in the Corvette driver’s trial. In the meantime, interest on his debt mounts. And that’s based on an income that’s by definition inconsistent.
Then there’s Jennifer, who had a shocking discovery on returning to her 40-year old, three-bedroom cabin in Virginia three years ago. She’d heard about home-sharing, and thought a trustworthy 30-something professional with a verified account and a stream of great reviews would be the perfect person to rent it to. The cabin was rented by a group of four for three nights for Thanksgiving, the holy grail of reservations - higher rates, a higher chance of a family get-together, and she’d be away at the time. Jennifer didn’t hear a peep from her guests throughout the holiday weekend, and assumed everything had gone smoothly until the day after.
It wasn’t exactly great news.
The kitchen walls and the range hood were covered in blackened scorch marks, the wooden cupboards and counters were burnt to a crisp and the common areas of the cabin were coated in a thick powdery film that she suspected was from the emptied fire extinguisher sitting on the kitchen floor.
Jennifer contacted the guest, who readily admitted in an email that he had started the fire, but he’d gotten sidetracked and had forgotten to let her know about it sooner. Next, Jennifer sent photos of the fire damage and a list of items that needed to be replaced to the on-demand platform. Damage was documented, the guest admitted wrongdoing, and Jennifer assumed that she’d receive the estimated $7,200 in compensation to clean, repair and restore the home.
Two weeks later, the on-demand provider responded stating it had not received enough documentation, closing the case as a result.
Like many who make their income in the on-demand economy, Jennifer didn’t realize that on-demand platforms don’t guarantee compensation for accidents like hers. Worse still, many homeowners’ insurance policies place restrictions on coverage for home-based businesses - especially home-sharing. Not that anyone let her know, but she, and anyone else renting their home, would need a commercial insurance policy.
Whether you’re driving passengers around in a Prius or renting a cabin in the woods, commercial insurance isn’t just hard to afford, it’s prohibitively expensive.
“I’ve been looking for commercial insurance, but the quotes I got were insane,” Mike admitted. “I have two vehicles, I pay about $250 a month in personal insurance to cover them both; the $1,000 per month quote I got for commercial insurance covers only one car. Who can afford that?”
A FastCompany piece, using data from SherpaShare, found that ride-share drivers on Uber and Lyft in Cleveland make around $13 a trip. Forgive the napkin-math, but at fifteen trips a day, before taxes and working 5 days a week, that’s $975 a week - roughly $50,000 a year, assuming absolutely no days off. Mike’s quote of $12,000 a year for commercial auto insurance prevents him from working and earning a living.
For an industry priding itself on its be-your-own-boss, work-your-own-schedule (especially if it’s part-time!) lifestyle, the way they’re being treated is brutal. It sounds melodramatic, but it’s true; the moment a ride-share driver turns on his or her app, or someone lets someone stay in their home, they’re in serious financial danger.
The insurance industry and sharing economy has failed its workers. A UPS driver is covered even if he’s not delivering packages, driving back to the depot to clock out for the night. A pizza delivery guy is still considered “on the job” even if he’s driving back to pick up a new delivery. These are marketed simply; they’re jobs. Yet ride-share platforms and their insurers have created a convoluted system of “time periods” purposely designed not to cover some aspects of ride-sharing work!
Ride-sharing and home-sharing platforms are marketing themselves as sources of income for hard-working people, those who may desperately need that money, yet they aren’t afforded many of the same benefits that “real” jobs get. These aren’t off-the-books sources of income for these companies; the workers are legitimate businesses contracted to the platform, and they deserve the same respect from both the platform and the insurance world.