Peer-to-peer Car Sharing Services Found Lacking in Substantial Liability Coverage

Cameron Aubernon
by Cameron Aubernon
peer to peer car sharing services found lacking in substantial liability coverage

In cities where owning a car can be a pain (New York, Boston, Seattle), drivers are opting instead to share vehicles with other drivers, with companies such as ZipCar, Car2Go, RelayRides et al offering their services to help the public get around. All anyone needs beyond the basics is a subscription to the car-sharing service, a reservation, and a drop-off location when they are finished with their errands. Even big-name rental car companies like Enterprise and Hertz are jumping into the new business model for a test drive, Avis having gone the farthest by purchasing ZipCar in January of 2013.

However, the insurance offered by these peer-to-peer rental companies might not all that it’s cracked up to be, with severe consequences should anything remotely catastrophic occur.

Forbes illustrates the problem with the liability insurance offered to subscribers of car-sharing services: An accident that left one driver dead and four others injured in Boston back in early 2012 led to a lawsuit between the four survivors against the estate of the deceased driver, the car’s owner, and RelayRides; the case was eventually settled out of court for an undisclosed amount. With the exceptions of California, Oregon and Washington, automotive insurance polices have not caught up with this new industry, leading to most states offering only the barest of liability coverage, and to potential disasters such as the example given in the article.

Should you find yourself wanting to take part in peer-to-peer car sharing, in particular the kind involving renting out your own vehicle instead of one from an established car-sharing fleet (RelayRides is of the former, for example), Forbes recommends you take out supplemental coverage of $100,000 each for bodily injury and property damage, and $300,000 per accident, with high net-worth individuals taking out more to protect themselves and their assets. In fact, no matter what happens, you may end up needing to bulk up the inadequate coverage no matter the situation. Either that, or stick to the maxim “neither a lender nor a borrower be” when it comes to car sharing.

Photo credit: car2go/ Facebook

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  • Krhodes1 Krhodes1 on Oct 17, 2013

    It really depends on how much in assets you have to protect. The typical young urban single or couple who is using Zipcar is likely to be effectively judgment proof - they don't have enough assets for a lawyer to bother going after them. For the most part, your primary home and retirement accounts are protected. This is really a decision that needs to be made with careful consideration though. I'm getting into comfortable middle age and I can't be bothered with an umbrella liability policy - I don't have enough attachable assets. If the lawyer wants my car collection, well, they can have them. I do carry $300K in liability on my car insurance though. I won't lose any sleep over accidents resulting in more than that - that is what un/under-insured coverage is for.

    • Rocketrodeo Rocketrodeo on Oct 17, 2013

      Most insurers want you to max out your auto liability insurance before you take out an umbrella policy. But if you have assets, you can't afford to be without one. Plaintiffs' lawyers will find and take your stuff -- all of it -- if you are underinsured, and even max auto coverage isn't enough if you hit someone who is wealthy -- or someone whose parents are. It is shocking how quickly one not-even-bad accident can eat up the standard 100/300/50 policy that lenders require.

  • Golden2husky Golden2husky on Oct 17, 2013

    There is not a chance in hell that I would let a stranger use any of my cars.

    • Morbo Morbo on Oct 21, 2013

      Yeah gotta agree. I get weirded out when the mechanic takes my car for service at the stealership (I know, I know, I have a real mechanic back home but northern Virginia inside the beltway sucks for finding affordable AND competent mechanics). I intentionally search for self-park garages, cause I don

  • RHD I wonder if these will be as easy to steal as so many other Kias are...
  • Zerog Isn't this the car that the self anointed AutoExtremist said would finally shut down Tesla AND the Prius?Just like his father - that Detroit bubble does him no good
  • Zerog When will the media admit that Mary Barra has simply been a disaster of a CEO, and "Dan the Man" Akerson is to blame?
  • Tassos When the Volt was on sale, it cost twice as much as the (better looking!) Chevy Cruze on which it was based. The interior of the Volt did not match that lofty price either. I like plug-in vehicles with a good Electric only range and no range anxiety. People with a 40 mile commute each way, if they were allowed to free charge at the office especially, could save some $ with the Volt, but not as much as to justify its lofty price.The 2nd gen VOlt was less nerdy looking than the 1st, but also even more similar to the new Cruze and indeed the Civic, which cost almost HALF. Then the geniuses at GM made a 2-door Caddy out of the Volt, the ELR, which was much smaller inside than the already cramped Volt, and... asked for... 4 times the price of the CRUZE. Don't remember the failed Caddy Cimarron? Neither did those morons.So a good idea in principle was screwed beyond recognition. GM Bled billions despite the lofty price, sold a bunch of VOlts, and finally had to cry "UNCLE". The end.I am not at all attracted by the VOlt's lousy interior. Its gas only MPG is also lousy compared to the ICE competition. A prius was 50% cheaper and far more sophisticated mechanically and got a stellar 50 MPG overall, and could be had in plugin with 10-20 mile range (the current one will double that again).
  • Buickman GM marketing killed many a car.