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TORONTO, Jan 6 (Reuters) - Aviva Canada will offer ride-sharing insurance to Ontario drivers who use their own vehicles to carry paying passengers next month, a service that could solve a major headache for ride-hailing company Uber Technologies Inc.
The Canadian subsidiary of Aviva plc said the coverage is the first time it will offer ride-sharing insurance anywhere in the world.
It will be available to existing Aviva personal auto policyholders for drivers that spend up to 20 hours a week driving paying passengers and costs a small portion of the income earned by the driver.
Insurance was a major bone of contention in a raucous debate at Toronto city hall in late September, when the council voted to write new transportation rules that would apply to Uber and its ilk and asked the Silicon Valley-based company to stop operating while they did so.
Aviva said it will protect ride-sharing drivers from the moment they make themselves available to passengers through the collecting and dropping off of those passengers.
Cab drivers typically pay between C$4,000 and C$12,000 a year for commercial coverage, depending on driving history.
Many have complained that the UberX service undercuts taxis on price by avoiding costly licensing and insurance.
Aviva said it will work with regulators across the country to make the product more widely available in coming months.
"We're excited to offer a simple and affordable solution within a driver's existing personal auto policy, thereby providing drivers and passengers with absolute peace of mind that they have insurance coverage while ride sharing," said Greg Somerville, chief executive of Aviva Canada.
The move by Aviva preempts a similar product planned by rival Intact Financial Corp's insurance arm, which said in September it was working with Uber on tailored insurance products for its drivers, in liaison with regulators and different levels of government in provinces where the service currently exists.
Toronto's city council expects to consider draft rules in spring to cover Uber and similar services, which match drivers, some of whom are not licensed taxi drivers, to riders via a smartphone app and take a cut of the fare. (Reporting by Alastair Sharp; Editing by Andrea Ricci)