As for the service quality etc, with Uber I guess people will have to have experienced a poor driver and leave a poor rating. I think it's a matter of time before people with crappy cars start driving for Uber, get into accidents or create generally unpleasant experiences for some users, and drop Uber's reputation downwards.
Not exactly true, they provide insurance for when drivers are between rides: http://www.pcmag.com/article2/0,2817,2454988,00.asp
http://techcrunch.com/2014/01/02/should-car-services-provide...
I'm not sure what the laws in the US are like, but in Germany that would already be covered by the mandatory insurance every car needs to have, before being allowed onto the streets.
In Germany the driver would have regular insurance, unless they're working for a cab company when they'd have commercial insurance.
The US situation is a bit more complicated because of liability - is the driver liable? Or the driver's employers?
if you're a customer with 4-5 stars rating you'll get 4-5 stars drivers, always, all the time.
This makes the probability of bad services very low (and in fact null in my experience so far - i'm pretty sure they select 5 stars by default for your 5 first ever rides too)