Everyone likes to do their bit for the environment, and if they can make a little extra money in the process, then fine. Oregon car insurance lawyers warned this week, however, that insurance companies are none too happy about the growing trend of car sharing. Companies that specialize in putting car sharing agreements in place, such as RelayRides, do not offer adequate cover in the event of a catastrophic accident, according to some insurers.
In fact, the majority of insurance companies are very dubious about the levels of coverage that would be in place if one of their clients decides to make a few dollars an hour by renting his car out to someone who needs a car every now and then, but not often enough to actually go out and buy one. Thinly veiled threats have been issued from insurers that they will remove cover completely if they find out one of their customer’s cars has been rented out.
How exposed are you?
The new car sharing services basically allow you to turn your own car into a RelayRides car (or any of the several other companies now offering the service). Basically, you decide how much you need per hour to be parted from your pride and joy (the car, not the partner), and the car sharing company lists your car online, gives you a call to let you know someone wants to rent your car, and the company gets their cut from the fee you charge. Simple.
Besides RelayRides–a company which has recently received venture capital backing from corporate giants Google Ventures and General Motors–other companies like Getaround and JustShareIt will also make arrangements for your car to be rented out during the times when it would otherwise be sitting idle, taking up a much-needed parking space. These companies offer various types of insurance cover to protect both drivers and owners, but is it enough?
In Oregon, the answer is “probably yes,” and state laws have been passed that go the extra mile to protect the people who are renting the car. The main facts are these:
- RelayRides provides $1 million in liability coverage in the event someone driving your car kills or maims someone while using your car.
- The insurance companies say that in the event of a claim exceeding $1 million (highly unlikely but always possible), it is the owner of the car who will most likely be held liable to pay the difference. Again, the odds of a jury holding you responsible for such an accident simply because you rented out your car to another driver are very long indeed.
- Perhaps a greater concern is that the car sharing companies protect themselves and expose the driver against defects in the vehicle that cause a claim.
- Oregon car insurance lawyers point to the new law which goes a step further. It allows the car sharing companies to go after the owner of the car for any “material misrepresentation in the maintenance of the vehicle. In other words, if you say you recently had the brakes repaired and they weren’t, watch out. The driver and the car sharing company can both come after you, and especially in Oregon.
Some gray areas and a worrying failure to respond
The Oregon statute aside, RelayRides seemed to try to allay potential renters’ fears by saying that other terms and conditions in their contract supersede the fitness disclaimer regarding “material misrepresentation.” Their insurance broker, Bill Curtis, went so far as to say, “I’m willing to put my hand up and say ‘Yes’ to the question of whether the owner will have protection in the event that they are sued and the allegation is that the car wasn’t maintained.” Oregon car insurance lawyers feel this sends out a mixed message to both car owners and the people renting them.
Perhaps the most worrying aspect of the entire debate is that insurance companies are simply not responding when questioned about their attitudes and policies regarding car sharing. They’re certainly far more forthcoming about things like using your car to run a taxi service on the side. Any time a client uses a private car for commercial use, the insurer will almost certainly not cover a resulting claim.
Things could get ugly
The Insurance Information Institute is an insurance industry group that was prepared to offer the following scenario. A spokesperson, Loretta Worters, recently said in an e-mail, “If the ‘renter’ was involved in an accident, most likely the insurer would non-renew or maybe even rescind the auto policy.” In other words, if you rent out your car through a car sharing company and the driver crashes it and injures someone, your insurer will not be best pleased if they end up at the wrong end of a lawsuit alongside the car sharing company’s insurer. The end result is that your company may take away your coverage.
USAA and Allstate were similarly negative. They made separate (but effectively equal) statements which by and large say that if they find out one of their customers is allowing a private vehicle to be rented out through a car sharing company, they are changing the risk profile of that vehicle and will almost certainly be denied any chance of renewing their policy.
Before entering into a car sharing agreement that allows a complete stranger to drive away one of your most prized possessions, the car’s owners have other things they need to consider:
- Is the person renting my car a safe driver? In fairness, most reputable car sharing companies check driving records of potential renters.
- Will this stranger try to steal my car? The answer, sadly, is that this is a possibility if the car is nice enough and the car sharing company doesn’t have adequate controls. This exact problem put one car sharing company out of business not long ago.
- Will I need to have my car cleaned inside and out after I get it back?
Car sharing seems like a good idea, and certainly has its merits. It allows the car owner to make a few dollars to help defray his own motoring expenses, and it allows the renter to be mobile when necessary, without the need to purchase and maintain a vehicle on an ongoing basis. However, there are insurance complications, and whether the car sharing companies are underestimating your exposure or the insurance companies are being overly cautious, only you can decide. For more information on applicable laws in Oregon, or if you have any issues with your insurer regarding a personal injury claim, contact one of the reputable and experienced Oregon car insurance lawyers for advice.