The popularity of car-sharing continues to grow as drivers discover paying for automobile use by the hour without shelling out for gas and insurance has its appeal. The convenience factor can't be overlooked either. Imagine renting the vehicle of your choice for less than a day and having the flexibility to choosing where to pick it up and return it.
And this is not just for quick jaunts to IKEA, which is a good enough reason, but sometimes you just need an additional vehicle to get to work or get the kids to hockey practice and back.
But enough about why services like AutoShare, Zipcar and Car2go and a number of other city-specific services continue to thrive. How safe or comprehensive is the insurance coverage for this type of service?
Zipcar offers its members an automobile liability insurance policy ($1 Million in Ontario / $2 million in B.C.), plus provincial minimum coverage for comprehensive and collision. AutoShare members are also covered by $2 million in third party liability coverage and it proudly claims on its website that it's "ten times the legal minimum and the best in the car-sharing business." Both of these companies will charge you a $750 deductible or damage fee in the event of an accident.
This may be all you require but in the unfortunate case you get into a serious multi-vehicle accident that exceeds the liability amount, guess who is on the hook for the rest of damages?
The driver is responsible for the remainder of the damages and can be sued for it once the auto insurance company settles the claim and issues the agreed-upon limit. This unfortunate situation may be avoided if you know exactly how much insurance you have and determine how much more is required to give you peace of mind.
The situation may be even direr for owners who lend out their cars to peer-sharing services, such as Quebec-based Communauto, which has more than 23,000 subscribers who share over 1,100 vehicles in Montreal, Quebec City, Sherbrooke, and Gatineau.
Peer-sharing firm RelayRides was recently fined $200,000 by New York State’s Department of Financial Services (DFS) for misrepresentation of insurance coverage. The firm held that drivers would not be liable for out-of-pocket expenses in the event that the car is stolen or involved in an accident, but the DFS investigation showed that claim to be false. Drivers in New York could be held personally liable for property damage, theft, bodily injury, or death that occurs during the rental.
Putting your vehicle to commercial use is not allowed by all insurance companies. In fact, if you fail to disclose this information to your insurer it will likely lead to non-renewal or outright cancellation.
To avoid any confusion, it is in the car owner's best interest to understand what is covered by his or her own insurance policy and compare that to the car-sharing service's commercial policy. Once this information is clear and you are comfortable with the coverage, there's no reason to close the door on car sharing.