Failing to insure a vehicle correctly for commercial use can expose drivers to significant financial and legal risks, warns Francois Smit, General Manager of Investigations at MiWay Insurance Limited.
South Africa’s e-hailing industry has grown rapidly in recent years, with approximately 150,000 drivers currently operating across the country. Many drivers work part-time, supplementing their income with rideshare platforms, while others rely on e-hailing as their primary source of income.
However, an emerging trend is raising alarms in the insurance sector: some drivers are opting for personal vehicle insurance instead of commercial coverage in an attempt to save on premiums. While this may seem cost-effective in the short term, the potential consequences can be severe.
“If a vehicle is being used for e-hailing without informing the insurer, any claim—whether for an accident, theft, or third-party injury—can be rejected on the basis of misrepresentation,” Smit explains.
Ann Cloete, from insurance brokerage and risk advisors Aon South Africa, emphasizes that using personal vehicles for commercial purposes carries serious risks. “Many vehicle owners may not realise that driving for platforms like Uber Eats or transporting passengers without proper commercial insurance can leave them exposed to significant liabilities,” she says.
Smit clarifies that in insurance terms, material misrepresentation occurs when a policyholder provides false, incomplete, or misleading information at any stage—policy inception, renewal, or when making a claim. “Even if a vehicle was initially insured for personal use, switching to e-hailing without informing the insurer can lead to claim denial,” he says.
Once a vehicle is used to transport fare-paying passengers, its risk profile changes considerably. “From an insurance perspective, the vehicle is no longer for private or general business use but for fare-paying transport, which carries much higher exposure,” Smit notes.
A common misconception is that standard business-use insurance automatically covers e-hailing activities. “The moment a driver accepts a ride through an e-hailing platform, the vehicle is effectively operating commercially. Standard business policies do not automatically extend to this use,” Smit warns.
Cloete advises drivers to carefully weigh the costs and benefits of commercial insurance. “It’s crucial to speak with a broker who can provide tailored insurance solutions with variable excesses based on the driver’s needs. Coverage is linked to your risk profile, which also means being a responsible driver and adhering to road rules,” she says.
Smit adds that insurance brokers share responsibility in ensuring clients are properly advised about commercial use. “Providing personal lines cover to a client who intends to use a vehicle commercially exposes both the client and the broker to unnecessary risk,” he says.
“Insurance operates on full disclosure. Drivers must ensure their insurer is fully aware of how their vehicle is being used. While commercial coverage may cost slightly more upfront, it guarantees protection if something goes wrong,” Smit concludes.
