It's odd that insurance is a fixed cost. The probability of an accident seems like it would increase with more time spent on the road. I assume that either Uber is covering the difference in insurance, or there's a bit of moral hazard at play.
https://www.nerdwallet.com/blog/insurance/best-ridesharing-i...
I also assume the Uber driver would have to tick off "business" as their car's purpose and your insurance may go up just because of that check mark, no matter if the mileage was higher or not.
Of course, you're absolutely right, and insurers have been slow to account for this parameter; the startup MetroMile exists solely because regular insurers overestimated what a difference the mileage makes. (MetroMile charges by how much you actually drive.)
If there is an accident, an Uber driver will need to pay out of pocket, unless they lie and tell the insurance company the ride wasn't for Uber.