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Insurance Risks with Car Renting and Sharing

relayrides.jpgCar ownership rates are changing. In the past, upwards of 40% of all new cars were purchased by Americans under the age of 34. However, according to new data from CNW research, the rate of purchases in that demographic has dropped to below 27% The decline in car ownership rates, particularly among the young, had been caused by a range of factors, including more urbanization, rising gas prices, expansion of public transportation options, and a tough economy. As a product of this situation, there has been a recent surge in companies offering car rental and sharing options. Our San Diego car accident attorneys understand the appeal of these options, but remind local travelers to be aware of some worrisome insurance issues as they relate to these joint car usage
Zipcar is perhaps the most well-known hourly car rental services. The company has customers who are “members” that pay to use the rental cars for various tasks on an hourly basis. RelayRides is an interesting offshoot program that allows community members to rent out their own idle cars to make extra money. These and similar companies have seen a surge in interest over the last few years.

However, there remains an obvious concern for all those who utilize these services. What happens in the event of an accident? Our San Diego County accident attorney is very familiar with the potential legal ramifications of these accidents—damages cause by auto accidents can quickly reach hundreds of thousands (or millions) of dollars. Are users of these rented or shared cars covered by insurance policies?

According to a New York Times story last week, concerns are being raised by many about the exposure that users of these services face in case of injury. For car-sharing services like RelayRides, personal car insurance policies generally will not provide coverage if the policy holder is taking a fee to allow another to use the vehicle. To balance this risk, RelayRides offers $1 million in coverage. However, if a particularly negligent driver uses your car through this program and causes significant damage, the individual car owner may be liable over that policy limit. Also, if the owner of the car being shared is found not to have taken good care of the car (or otherwise misrepresented the vehicle’s safety), the $1 million policy itself may not apply, exposing the owner to serious personal liability.

Our North Country injury attorneys know that similar insurance concerns have been levied against the more established names in the field, like Zipcar. Zipcar involves use of cars owned by the company, so some of the personal liability issues are less pronounced.

However, many have questioned the adequacy of the coverage given to company members. In most cases, Zipcar provides $300,000 in insurance coverage for those over 21. Those under 21, because they are deemed higher accident risks, usually only receive the state minimum coverage–$50,000 total for personal injury and property damage. Of course, that coverage is quite minimal, potentially leaving travelers exposed to significant claims on their personal assets and income.

Car sharing and car rental programs will no doubt gain in popularity in the coming months and years. As more local travelers use these services it is important to raise awareness of these insurance issues. For frequent users, it may be prudent to purchase “non-owner’s policies,” which can provide additional coverage to ensure protection no matter what might happen.

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