Car-Sharing Insurance Protects Drivers and Owners
While the rise of the sharing economy offers great opportunities for consumers, it also poses some challenges for the insurance industry, particularly around liability. Car-sharing insurance coverage protects a driver when renting a vehicle from a car-share or a peer-to-peer rental service. In either, agents need to navigate the regulatory and consumer issues with care.
A personal insurance policy will usually extend to cars rented through car-sharing and peer-to-peer services. Some credit cards also protect users from theft or damage while participating in car-sharing programs.
Some clarification: car-sharing is not ride-sharing.
- A ride-share allows consumers to use their car to drive passengers to a desired destination; Lyft and Uber are only two among many examples of this.
- Car-sharing allows drivers without vehicles to use someone else’s car for personal use on an as-needed basis; this might be either peer-to-peer, or as part of a community co-op or profit-making car share.
Car-sharing services, such as Zipcar, community car shares or Enterprise Car Share, have a fleet of cars for use in the program, and often include basic car insurance as part of the membership or rental cost, even for beginner drivers.
Peer-to-peer car sharing allows car owners to rent out their vehicles to other consumers for a fee. This can make the insurance situation complicated, because it’s not a rental company that owns the car. Car owners who rent their vehicles using peer-to-peer services need separate insurance beyond their personal policy. Some peer-to-peer services – such as Turo, Getaround and JustShareIt, for example – will also offer insurance.
The coverage provided by the car-sharing service can cover some things, such as liability, but there may be some gaps. In these cases, non-owner insurance could offer comprehensive and collision protection while renting a car; the car-sharing company isn’t likely to cover the cost of repairing or replacing a vehicle in collisions or unexpected situations.
How InsurTech is Changing Car-Sharing Services?
Insurtechs are moving fast to meet the high need by offering on-demand insurance for people using the sharing economy. Some apps allow the owners to turn insurance coverage on and off. State laws regarding car sharing vary, and each car-sharing service also has its own rules. Rentals from car-sharing and peer-to-peer services will include the minimum level of coverage required in the state.
A further note: As regulatory issues related to the sharing economy arise, they will be addressed within the Innovation and Technology (EX) task force under the National Association of Insurance Commissioners (NAIC).