Does My Insurance Cover Ride Sharing Programs?

Ride Sharing

Many large cities now have ride-share or Zipcar programs. Ride-share programs allow owners of cars to “rent” out their cars to people in need of transportation, but what are the insurance implications? Most insurance policies allow you to lend your car to a friend, but renting it out for money may violate the contract with your insurance company. In that case you may be personally liable for any damages the renter causes to people and property while in your vehicle. This is a huge risk to take and something many people part of this program are not aware of.

Massachusetts Supreme Judicial Court has recently upheld the long standing exclusion the standard automobile insurance policy has that excludes optional coverage when a vehicle being used as “livery or public convenience” In addition, the Massachusetts Department of Insurance has also recently approved another endorsement being used by auto insurers in the state, that further addresses car-sharing , saying in part “We will not pay any claim for injury or property damage under the policy while your auto is being used in a personal vehicle sharing program….”

Your personal auto insurance policy clearly defines who an “insured” is on your policy. The policy also specifies that all household members and regular drivers must be listed on the policy and when not rated on another personal auto policy, a premium will be collected on that driver. Clearly when you “rent” your car to someone or multiple people in a day, they are not listed and rated on your policy, therefore voiding the policy. Additionally, charging people to use your car voids your auto policy as well.

When your auto policy has been voided the financial implications can be devastating. As the owner of the vehicle or even a driver of the shared car a court of law can, and probably will, uphold an insurance company’s denial of a claim.

Zipcars

What about Zipcars? This program is a little different. Unlike a ride-share program, the company owns the car and rents it to people. The question is does the company have insurance that will cover you and any accident you may be in? How much is the coverage and if it is not enough, will you then be liable for damages?

Most personal automobile policies define your auto as “ The vehicle described on the coverage selections page”  and “Any auto used as a temporary substitute for the described auto while that auto is out of normal use because of breakdown, repair, servicing loss or destruction” Would a  Zipcar fit this description? In this case as well it is doubtful that your personal auto policy would respond in the case of an accident to property damage or injuries.

Finding out you aren’t covered in one of the above situations when you need the coverage means that it’s too late. Before you rent, borrow or lend a car it is a great idea to contact your local agent to discuss any exclusions in coverage.

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