Post written by Terry Ewing
Carsharing describes when people rent their car(s) to others they do not know. Not a new concept, this idea gained popularity in Europe during the 1990s. Today’s carsharing typically falls under this scenario:
An individual car owner joins a club in order to allow that club to rent out their car when not in use by the owner in hourly, daily, weekly increments or more. Carsharing clubs can be commercial businesses, public agencies, cooperatives or ad hoc groups. Also, a few traditional car rental companies like Hertz (Hertz on Demand), Avis (Avis On Location), and U-Haul (U-Haul Car Share) have joined in on this increasing business opportunity. The club manages the process of advertising the car’s availability for use, monitors the driver renting the vehicle, and rental payment.
Inexpensive Convenience or Expensive Liability?
Carsharing services are mostly available around the larger cities throughout the U.S. making it easy for consumers to give up taxis, traditional car rentals and even personal auto ownership.
While carsharing may be an inexpensive ride, both renters and the car owners they rent from need to understand the risks and the liability of sharing their car with strangers. If a loss would occur, litigation over financial responsibility could become very costly!
Many state insurance laws have not even begun to catch up with this new industry, which can present its own series of challenges to help set the record straight should a situation arise.
Suggestions Before You Share
Insurers and legal experts suggest drivers, and those who lend out their cars to carsharing services, review their insurance coverage before using the service to be sure what is, or is not, covered.
Also know that most carsharing services only require minimum state requirements for liability insurance. This is usually well below the level of coverage needed to be protected against liability verdicts resulting in millions of dollars. Know the overall risk you may be signing up for before cashing in on the quick reward of a less pricey trip.
Key Takeaways for Insurers
While carsharing is a growing business, it is a business that most insurers consider a high risk and may not even consider entertaining.
As carsharing continues to gain popularity in more cities and states, Westfield’s insureds, agents and underwriters need to be aware of the many concerns that exist with this emerging exposure, as well as the means to mitigate.
Terry Ewing has been in the insurance business with Westfield for 40 years having experienced all facets of commercial lines (coding, rating, underwriting, and managerial) and for the last 6 years has been a Line of Business Manager for auto, GL, umbrella and employment practices liability.
Image Source: Caitlin Regan under Creative Commons Attribution 2.0 Generic