ORLANDO, Fla. — As we all know, car sharing, continues to be an growing trend in the U.S., Canada and Europe. Some renters, and the car owners they rent from, yet don’t know they may be taking on risks. The risks associated with participating in ride-sharing services are not yet completely understood and do not fit neatly into insurers current risk-pooling models, raising numerous insurance related questions. Specifically, there is increasing concern over the potential gaps in insurance coverage in the unfortunate event of an accident or injury.
Transportation Network Companies (TNCs) such as Uber and Lyft are the most highly publicized companies under the sharing economy umbrella.
Car sharing services may seem like a good deal, but liability insurance hasn't kept up with businesses. Make sure you're covered before you rent or lend out your car to peer-to-peer services. Some auto insurers are considering revising their policies to address car sharing. While every personal auto insurance policy differs, most contain exclusions when a person uses their vehicle for livery services. Several insurers have developed products to fill gaps in coverage created by commercial ride-sharing and the common use of livery exclusions in personal auto insurance.
Before you rent from, or agree to rent out your vehicle to, a car-sharing service you should consider this:
1) Even if the rental company provides the state minimum liability insurance per rental, consumer groups recommend that lenders take a minimum of $100,000 bodily injury and $300,000 per accident and property damage up to $100,000 to be safe. High net-worth individuals should carry higher limits. Consider buying supplemental auto coverage from the rental car company, if available, to bring you up to this level of coverage, which can cost from $7 to $14 per day extra.
(State minimum liability requirements can be as low as $10,000 per injury per person; $20,000 for all injuries and $10,000 for property damage per accident, but that is not enough to protect anyone with substantial personal assets.)
2) For those renting a car who don’t own a car or whose companies don’t offer supplemental coverage, non-owner vehicle liability policies are available from some insurers, though they are not widely promoted. They are recommended for those who rent more than 10 days a year or who borrow vehicles for sporadic use. They do not cover physical damage to vehicles, however.
3) If you have dropped collision and comprehensive coverage from your policy on an older car to save money, you will not be covered for these on any rental vehicle; you need to purchase additional insurance coverage when you rent a car to be covered in the event the car is lost or stolen.
4) Both subscription car sharing companies and peer-to-peer services may impose fees, including towing and storage, ranging from several hundred to several thousands of dollars for damages incurred in accident, so check the fine print of any agreement you sign as a vehicle renter or lender.
5) Parents of teens and young adults who may avail themselves of car-sharing services: If the child driver is on your policy, inadequate rental coverage may leave you at risk.
Ride-sharing is different, however, than taking a traditional taxi or limousine. Taxis and limousines have been licensed by the state and/or local transportation authority. The vehicles are required to be inspected and drivers must be properly licensed. In addition, taxi operators are required to have commercial insurance that protects a passenger and third parties (i.e., pedestrians or other drivers) in the event of an accident. TNCs may not be subject to the same stringent requirements that apply to taxis and limousines. Additionally, there are issues surrounding the insurance coverage provided through these programs.
More information on insurance issues surrounding TNCs can be found by reviewing the materials from CIPR’s Commercial Ride-Sharing and Car-Sharing Event, held on August 16, 2014.
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