Offering car rides for a fee? Ensure insurance cover

Motorists using their vehicles for private car hire services such as UberX have been advised by the General Insurance Association (GIA) to get the necessary motor insurance coverage, to avoid potential financial loss, reported The Straits Times.

Private car insurance policies contain a "limitation to use" condition that restricts usage of the vehicle to "social, domestic and pleasure" purposes. This means that if the vehicle is used for "hire or reward", such as ferrying passengers for a fee, the insurer is entitled to void the policy on account of breach of warranty, and the policyholder could be denied cover. In the event of an accident, the insurer will not be liable to pay for damage to the insured vehicle, damage to third-party property, or bodily injury resulting from the accident.

Mr. Derek Teo, GIA's Executive Director said, "While GIA neither supports nor disagrees with the rise of private car hire services, motorists need to be aware that their private car insurance policies have a 'limitation to use' condition, which limits usage to social, domestic and pleasure purposes."

Car passengers ferried for a fare are protected under the Motor Vehicle (Third-Party Risks and Compensation) Act, which disallows an insurer from denying compensation to claimants for third-party bodily injury. It also allows the insurer to recover the compensation paid to the third party from the policyholder of the vehicle if his plan is limited to social, domestic and pleasure usage.

Motorists who wish to expand the "limitation to use" or the "social, domestic and pleasure" restriction clause are advised to approach insurers to check on their policy's cover and pay an extra premium. According to GIA, its member insurers are prepared to expand this limitation to allow the insured vehicle to be used for "hire and reward".