South Africa’s e-hailing economy has expanded rapidly in recent years, with an estimated 150 000 drivers currently operating across the country[i]. Many of these drivers work part time, using platforms after hours to supplement their income, while others rely on e-hailing as their primary source of income.
An alarming trend is emerging within South Africa’s e-hailing sector, raising concerns in the insurance industry, with some drivers opting for personal vehicle insurance instead of commercial cover in an attempt to save on monthly premiums. While this may appear to offer short-term savings, the potential risks can be significant.
Failing to insure a vehicle correctly for commercial use can lead to significant risks. If a vehicle is being used for e-hailing and this has not been disclosed to the insurer, any claim arising from that vehicle – whether due to accident, theft or third-party injury, may be rejected outright on the basis of misrepresentation.
In insurance terms, material misrepresentation occurs when a policyholder provides false, incomplete or misleading information to an insurer, whether at policy inception, renewal or claim stage. This means that even if a driver initially insured their vehicle for personal use but later began using it for e-hailing without informing their insurer, they still risk having a claim declined.
Once a vehicle is used to transport fare‑paying passengers, its risk profile changes significantly. From an insurance perspective, the vehicle is no longer being used for private or general business purposes, but for fare-paying passenger transport, which carries significantly higher exposure.
Another common misconception is that standard business-use vehicle insurance automatically covers e-hailing activities. The moment a driver accepts a ride through an e-hailing platform, the vehicle is effectively operating commercially, and a standard business policy does not automatically extend to cover this.
Beyond the risks to drivers themselves, insurance brokers also have a responsibility to ensure clients are properly advised when vehicles may be used commercially. From a broker’s perspective, proceeding with personal lines cover while aware that the client intends to use the vehicle commercially, even at a later stage, exposes both the client and the broker to unnecessary risk.
Insurance works on the principle of full disclosure. Drivers must ensure that their insurer knows exactly how their vehicle is being used so that the correct cover is in place. While commercial cover may cost slightly more upfront, it ensures drivers are protected should something go wrong.
