Car sharing services like Zipcar and U Car Share have grown in popularity, as more city dwellers eschew car ownership, preferring to rent a vehicle when they need one. This seems to be an innovative, cost-effective and sensible way to solve personal transportation needs for many Americans.
We have followed this trend for several years, providing insurance advice about using a car share service, and cautioning our clients to protect themselves first. After all, when you’re sharing a vehicle, you could potentially be sharing something much more important: liability.
The car sharing idea has evolved even further. Now, private vehicle owners can offer their vehicles for rent through peer-to-peer car sharing services like RelayRides. It’s sort of like Zipcar in reverse: you can rent your idle vehicle to someone who needs it temporarily. Realizing that insurance companies would not approve of (or cover) this kind of use, RelayRides offers a $1 million liability policy. That’s more liability coverage than most people have on their own personal auto policies. But believe it or not, it may not be enough.
Take the case of Massachusetts resident Liz Fong-Jones, a 24-year-old MIT grad and Google alum. Ms. Fong-Jones shared her car through RelayRides. The driver was killed in a tragic accident, and 3 passengers were critically injured. Suddenly, $1 million may not be enough insurance. If the accident damages exceed that, who will be responsible? Probably not Ms. Fong-Jones’ insurer; personal auto policies exclude such behavior.
Will that leave Ms. Fong-Jones’ assets and future earnings vulnerable to lawsuit? That remains to be seen. But, it is another cautionary tale about using car share services. This is just the scenario we were worried about with our original posts 3 years ago.
If you have questions about insurance for renting a car for business or personal use, or would like to know more about how car sharing affects your Maine auto insurance, contact Noyes Hall & Allen at 207-799-5541.