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