$47 Uber - $23 for Insurance and Driver ONLY Got $9!
Yesterday, I picked up a passenger at a hotel and took them to the airport to rent a car. The ride was a short 7-mile trip, and Uber said I’d earn $9.20. Nothing unusual there.
Then, a few minutes after I dropped them off, my phone buzzed: a $9.50 tip. More than the fare itself.
It caught me off guard. Like, why was it more than my earnings, and why was it such an odd number? On rare occasions, passengers are super generous and tip $20 or more. But this was a young guy on a business trip.
So I opened the trip receipt in the Uber app, and that’s when things got interesting. The passenger had been charged $47 for that short weekday ride, and it wasn’t even during a busy rush.
The Rabbit Hole
Digging into the breakdown, I saw that Uber listed $23 as “Operational Expenses,” which is basically commercial auto insurance.
That one line sent me down a rabbit hole of questions:
Why did this passenger pay so much for commercial auto insurance?
Why did I get paid so little?
What did other passengers pay yesterday?
And what does Uber actually do with that money?
What Uber’s Own SEC Filing Reveals
That increase came “primarily due to higher insurance rates per mile and more miles driven.” In other words, the more we drive, the more Uber spends on insurance, and those costs get passed along to passengers.
That makes sense in theory. But here’s the key part: insurance and operational costs aren’t some small add-on. They’re part of Uber’s “Cost of Revenue”, the same bucket that driver pay comes from. So when those insurance costs go up, they quietly eat into what drivers earn. No one sees it happen because it’s buried inside Uber’s accounting.
What My Own Data Shows
After that ride, I pulled data from all 15 trips I completed that day.
Passengers paid: $312 (before tips and discounts)
Uber booked: $104 for insurance and operations
Average insurance cost: $6.93 per trip
Average per mile: $1.44
This $104 doesn’t include local taxes or Uber’s profit margin. Out of the $312 passengers paid, I earned only $119, barely a third.
Most passengers paid roughly $3 for commercial insurance. But four passengers, for no apparent reason, paid $14, $16, $22, and $23 for that same commercial insurance line item. It doesn’t scale with distance. It feels almost random. It’s definitely exploitative!
What Might Be Happening
That day, it was snowing so heavily that Uber likely applied surge pricing for passengers. Typically, that surge also benefits drivers. But I only made $7.50 in surge bonuses for the entire day across all my trips. So where did the rest go? I suspect Uber may have used those surge moments to backfill its insurance pool.
Think about it: If one passenger pays more during surge, Uber can absorb that excess into its “operational costs,” effectively covering insurance for other rides. That’s fungible money, one giant shared pool. The problem is, neither drivers nor passengers know it’s happening.
It’s Not All Uber’s Fault
To be fair, Uber isn’t inventing these insurance costs out of nowhere. Commercial auto insurance rates across the U.S. have exploded. Inflation, rising repair costs, lawsuit settlements, and state-by-state insurance regulations have driven premiums to record highs. In dense markets like New York and California, insurance can cost three to four times as much per mile as it did just a few years ago. So yes, Uber is responding to real economic pressure.
But here’s where they do share blame: They’ve chosen to grow their driver base faster than the insurance market can handle. By flooding cities with low-quality vehicles and inexperienced drivers, Uber spreads risk across more cars, thereby increasing insurance costs.
Uber could take a more disciplined approach:
Limit new driver signups in oversaturated markets.
Incentivize higher-rated, safer, and more experienced drivers.
Tie insurance rates to safety records instead of treating every driver the same.
That kind of restraint would help manage insurance costs without hiding them in the fine print.
The Transparency Gap
When a passenger sees a $47 fare, they might assume I’m getting most of that. When they tip me $9.50, they probably think they’re rewarding good service. But in reality, they’ve already paid more to insurance than to me. Drivers don’t see a “rate card.” We don’t know why one ride pays more or less than another. Uber holds all the data; drivers are left guessing.
And riders? They think higher fares mean higher driver pay, when they don’t.
The Bigger Question
Uber’s filing says insurance costs are tied to miles driven and the per-mile rate. That’s fine. But what’s the formula for charging per trip?
Why can a short ride carry the exact base insurance cost as a long one? And why don’t drivers or passengers ever see that math?
If Uber’s “operational expenses” are growing by billions, it’s time for transparency, for both sides of the transaction.
Closing Thought: Good Drivers and Passengers Are Paying for Bad Ones
So the next time you get your Uber receipt, take a look at the fine print. See how much you paid for “Safety, Insurance, and Operational Expenses.”
Ask yourself: who’s really covering?
Drivers don’t set the price. Uber does.
And as long as insurance remains their silent partner, both passengers and drivers are footing the bill for risks they can’t even see.
