While ride sharing and car sharing are fairly new terms to most of us, these services are definitely here to stay. The idea of sharing a ride or car seems harmless but it may have implications for your personal auto insurance.
What is Ride Sharing?
Ride sharing is an on-demand service that provides one-time shared rides on short notice. Companies like Uber, Lyft, Sidecar and eRideShare act as a broker between the driver and the passenger. These companies use smart phone apps and the internet to match drivers with passengers. The idea behind ride sharing is to earn money by carrying passengers in an otherwise empty car. Fares are set and the drivers receive a cut of the cost from the transportation network company. Ride sharing is a lot like a traditional taxi or limo service.
What is Car Sharing?
Car sharing is 24/7 self-serve access to a network of vehicles in and around cities that can be reserved by the hour or by the day. FlightCar, GetAround, and RelayRides are car sharing brokers that act between people offering their cars for rent and people seeking rentals. Car sharing is a lot like a renting a car from a rental car company.
What Does All of This Mean for Your Personal Auto Insurance?
Since ride sharing and car sharing involve use of a personal vehicle, the personal auto policy becomes a target. There are significant issues with liability if a personal car is involved in an accident while being used in a car or ride sharing arrangement. Typical language in a personal auto policy excludes coverage with respect to liability while the vehicle is being used for a public or livery conveyance. While some of the transportation network companies provide coverage, there may still be gaps.
As ride sharing and car sharing continue to gain in popularity, whether you are a driver or a rider, be aware that an insurance claim could be complicated or even worse, not covered. Drivers should not rely on their personal auto policy as coverage due to the constant transition between personal use and business use of the vehicle. As a rider, if you are a passenger in a ride share auto involved in an accident the answer may not always be clear. Damages could be covered by the ride-sharing company's liability if your driver was at fault, a third-party's insurance company if they were at fault instead of the driver, or your own personal auto insurance company.
Given their popularity, these services are here to stay so it’s important to know what the rules and your responsibilities are before using them. Ride sharing and car sharing insurance coverages are still being hammered out as are other legalities and licensing requirements. If you would like to discuss this further with one of our agents, please give us a call today!