Driving for Uber is equally touted as a way to make extra money when you aren’t working at a full time job, and as a replacement for a full time job. Yet there are many horror stories bubbling up through the media because of mistakes people made and assumptions they acted upon that just weren’t true. Let’s review the eight things you need to know before you become an Uber driver to avoid legal, financial and other problems.
It Is Your Responsibility to Manage Your Expenses
Uber doesn’t have a legal obligation to ensure that you earn enough from fares to pay for your gas, parking, tolls, and wear and tear on your vehicle. Nor does it have to pay you a living wage, though driving for Uber may help you earn enough to make your next car payment. Yes, Uber lets you lease a car through them to drive, but that is way more expensive than driving your own used vehicle or leasing an affordable used vehicle on your own.
If you’re constantly driving around looking for fares, that’s burning your gas and time without any financial benefit. You can reduce the wasted time by parking in parking lots near venues where many people want to pick up a ride, such as near airport terminals, stadiums as games are letting out, or at the end of a concert. You’ll find these opportunities in downtown areas, which makes Uber driving less profitable for those in the suburbs unless you’re handling rides to and from work for others.
Optimize Your Earnings
Uber drivers earn peak rates when driving during periods of peak demand, whether this is late on Friday and Saturday night or at the end of major events throughout the year. Think about the high pay rates they advertise, and realize that this may be what you earn driving people around on Black Friday to malls or picking them up from the airport the Wednesday before Thanksgiving. You’re not going to earn that same rate every hour, and you certainly won’t earn it driving 8-5 or avoiding the most crowded times.
Pay rates for rides vary by city, time and demand. If you want to earn as much as possible, drive when demand is highest and in the areas where fares are higher. These are the times when surge pricing applies. You can earn more by turning off the app until you reach areas with peak demand. However, you should plan ahead to be in surge zones before things get hot instead of trying to chase surge zones.
You are legally obligated to pay income taxes on income earned by driving for Uber. You have to pay self-employment taxes, too, because you’re a contractor for Uber, not an employee. You can reduce the hassle factor by increasing tax withholding with your day job employer to avoid paying quarterly self-employment taxes on your Uber income. If you only drive for Uber, you are required to pay self-employment taxes quarterly.
Know if Your Current Auto Insurance Is Good Enough
Most auto insurance policies only cover you as a conventional driver, whether picking up the kids from school or driving to work. Many auto insurance policies specifically exclude coverage for your vehicle if you’re working as a taxi or ferrying supplies for a business. This means you need special auto insurance for your work as an Uber driver. There are a variety of “by the mile” insurance options that let you log in and only pay for commercial auto insurance while working as an Uber driver instead of the more expensive commercial auto insurance rate on a month to month basis.
You cannot rely on Uber coverage to pay for a car accident because you hit another car while trying to pick up a fare, and your personal car insurance won’t cover a lawsuit by an Uber passenger hurt in a wreck, or if you run over their foot with your vehicle as they get out of the car. If you are sued, the first thing you should do is contact a car accident attorney Baton Rouge for assistance.
Reviews are Capital
Reviews by your riders will determine whether or not Uber will keep you in its employ. Reviews and ratings will determine if you’re allowed access to the upper tier, though there are other requirements to be allowed to earn the higher pay rate of Uber Black. And many customers won’t consider a driver unless the person has a perfect score. A four star review is more like an F than an A if you’re comparing reviews to grades. Uber starts to consider dropping you as a driver if your overall score is less than a 4.6.
If you offend a passenger by arguing politics or trying to sell your product to the seemingly captive audience, you’ll get poor reviews and eventually fail to find rides. You should be careful about asking people to sign up as new passengers, though you can hand out business cards with your referral code and hand them out as you help people unload their luggage. Too hard a sell on the friends of the person who ordered the ride, though, and you’ll deserve a negative review.
You’ll receive negative reviews if you don’t engage with customers, so don’t try to be an Uber driver if you aren’t a people person. You’ll receive bad reviews if the inside of your car is not clean or there isn’t sufficient space for the customer. You can protect yourself from bad reviews by reminding people when things you prohibit are actually a matter of law or Uber policy, such as prohibiting open beers while they sit in your backseat or carrying too many people in the car.
You can help maintain your reputation by asking happy customers to give you a perfect review. Don’t compound the problem by attacking customers who give you a bad review online, though you have the option to give the passenger a bad review, too.
Dash Cams May Save You
Dash cameras are routinely used to protect people from insurance fraud, corruption by cops and record accidents when there are no other witnesses. Dash cameras have become invaluable to Uber drivers in a number of situations. One driver found himself protected from false bad reviews by a social justice warrior who threatened to give him a bad review because he wouldn’t take down a Hula dancer toy on the dashboard. Her rude treatment of him and accusations of cultural appropriation would have likely turned into a negative review and wave of hate online if he hadn’t had the dash cam video of him politely disagreeing with her.
Another case that popped up on social media in 2015 involved a driver who took his passenger to the entrance of the hospital to which she wanted to be taken. He asked her to get out of the car because he’d arrived at the point his GPS said was correct, and she then refused to get out of the car until he drove her to the other side of the complex so she didn’t have to walk that far inside the facility. He begged her to get out, because he couldn’t leave until she exited the vehicle nor pick up another fare. The video runs for more than fifteen minutes as he asks, begs and then screams for her to please just get out of the car.
Without that video from the dash cam, he’d have had no recourse if she charged him with failing to take her to the hospital as agreed. Instead, having dash cam footage of the arrogant woman refusing to exit the vehicle, and insulting him regularly, as he asks again and again for her to leave, protected him from bad reviews. It also demonstrated that she wasn’t in serious discomfort when she could argue with him for twenty minutes about not wanting to get out at that point where emergency room staff could help her.
Dash cams protect Uber drivers from deliberate vandalism by taxi drivers who see the Uber drivers as competition by recording events in an impartial and legally admissible manner. Dash cams record hit and run accidents and the cases where someone cuts off the taxi and then fakes a fender bender to file an inflated claim against your insurance.
Special Licensing May Apply
Depending on the city you live in and/or drive in, you may be obligated to pay for a business license, taxi license or some other license. It is your obligation to know what licenses you’re required to have, and you can receive tickets if you fail to have them when pulled over.
Know Where You’re Going
A GPS system or car navigation system is a reasonable tax deductible business expense if you drive for Uber. And it is your responsibility to find your fares in a reasonable period of time and get them to their destination in a timely manner. If you get lost driving them around, they have the right to give you a bad review and it will be upheld by the company. If you get lost trying to find your fare, you’ll lose out on the fair.
Before you start your Uber adventure, understand how peak rates work, and know that it is your obligation to pay your taxes and minimize expenses to earn a profit. Your standard auto insurance doesn’t always cover you when you’re driving for Uber, and a dash cam may protect you from staged accidents and bad reviews by malicious passengers. Ask for good reviews, and give passengers bad reviews instead of blowing up the matter on social media. Know the area where you’ll pick up or drop off fares, and plan your schedule so you’re where the demand is before surge pricing kicks in.