Uber drivers operating without the correct third party insurance or licence could be financially ruined if their vehicle is in an accident and causes injury, the Department of Transport has warned.

Radio 6PR has revealed the riding sharing company has not insisted all its drivers obtain the omnibus licence or commercial vehicle third party insurance which the state government introduced as law in July – prompting fears many are driving illegally, without realising.

The new regulations were designed to legalise ride sharing services and level the playing field between the struggling WA taxi industry and the increasingly popular Uber service.

Department of Transport on demand general manager Iain Cameron, however, said many of Perth's more than 3000 Uber drivers were driving at risk and would soon be fined if they failed to hold the correct paperwork.