Carsharing and Auto Insurance: What You Need to Know
Carsharing is one example of an innovative economic model of the new economy. It lets vehicle owners make a bit of extra income by renting out their cars to customers. It also lets those who don't want to buy a car have access to one on a temporary basis.
Both scenarios can work well, but it's important to know the implications for car insurance. After all, accidents happen -- and you want to make sure you and your passengers are protected.
Your Coverage as Owner or Driver
Insurance coverage for carsharing depends on the kind of service and the individual company. If you are using a peer-to-peer service like Turo to rent your car others, that company's commercial insurance applies when the car is in use by a renter. Whenever you're driving a shared vehicle, owned directly by a company like car2go, you're protected by that company's insurance.
In Ontario, commercial fleet coverage has been approved for the peer-to-peer loaner companies Turo, Outdoorsy and Shift Ride. The government notes that insurance protection might be limited for other companies that offer a similar service. For that reason, those who choose to list their cars on these other services should exercise caution.
Your Personal Insurance May be Affected
In the event you're renting your vehicle, you still have to inform your personal insurer. How the commercial fleet insurance and your own work together depends on the company. Your personal insurance may cover you whenever you use it as normal; but the carsharing insurance may apply when you're delivering your auto to the customer and during the rental period.
It's important to note that your personal insurer may not approve your carsharing endeavour. They can attempt to cancel your policy. They may also deny a claim later on if you didn't let them know about your participation. Some companies may increase your premiums for your personal policy -- the intent is to provide extra insurance that is on top of the commercial fleet insurance.
You May Incur Costs Even When Covered
When you are renting a car through a service like car2go, or Carshare Atlantic, the vehicle is owned by the company and covered by its insurance. You may have the option to choose the kind of insurance. Carshare Atlantic, for example, gives you the option to choose the deductible you want. The company states on its website that your liability is restricted to this amount, but for all companies it's a good idea to read the contract in detail before signing up.
You should always know the entire terms of your participation in the program. The company may void your coverage if you've violated other rules or guidelines of renting a shared vehicle.
Making Sure You're Protected
If you're ready to participate in a carsharing program, you might want to explore other options for personal auto insurance.
Check out car insurance quotes on Insurance Hotline to see what other companies offer. Then you're ready to hit the road with the best coverage in place.
Driving for a rideshare service can be a great way to make some extra cash. But there are costs associated with being an Uber or Lyft driver — including extra car insurance coverage.
Personal car insurance doesn’t usually cover driving for business use, which is why commercial vehicles have specialized policies. But when you’re a rideshare driver, your personal vehicle isn’t exactly a commercial vehicle — you’re just using it occasionally for business purposes.
This is where rideshare insurance comes in, helping close coverage gaps when you drive for a rideshare company in your spare time. Here’s what to know about rideshare insurance coverage: how it works, what it covers, and when you need it.
What is rideshare coverage?
Many major insurers, including Progressive, Allstate, State Farm, and Farmers, offer rideshare coverage. This type of insurance is typically sold as an add-on to your personal car insurance policy, meaning you don’t need a separate rideshare insurance policy. The add-on, aka endorsement, often includes the following coverage types:
- Comprehensive insurance: Covers damage to your vehicle due to severe weather, theft, fire, or another event outside your control.
- Collision insurance: Covers repairs to your vehicle after a wreck with another car or object, no matter who’s found responsible.
- Uninsured/underinsured motorist insurance: Covers your medical expenses or vehicle repairs if you’re involved in a crash with an at-fault driver without adequate insurance.
Depending on the specifics of your insurer’s rideshare endorsement, you may also be able to get additional coverage, such as roadside assistance or rental car reimbursement.
While you may already have these coverages on your personal auto insurance, without a rideshare endorsement, your policy likely won’t cover you if you’re in an accident while driving for a transportation network company or TNC. This is the primary reason you need rideshare insurance.
Your insurance costs will increase by adding rideshare coverage and vary by insurer. State Farm says its endorsement generally costs between 10% and 20% of your personal policy premiums, while Safeco indicates it’s typically less than $10 per month. Coverage limits and deductibles also vary by insurer. This coverage can help fill an insurance gap, protecting you when your transportation app is on and you’re waiting to accept a ride request.
How does a rideshare company’s insurance cover drivers?
In addition to rideshare add-ons for your personal auto policy, rideshare companies also offer insurance coverage. It works differently than an endorsement you add to your personal policy.
Rideshare services typically offer liability insurance that protects you when en route to a pickup or transporting passengers. You don’t need to pay for this coverage; it’s provided at no cost to rideshare drivers. Liability policies generally have two components: bodily injury and property damage. Bodily injury can pay for healthcare expenses if you’re found at fault in an accident and passengers you’re transporting are injured. Property damage covers you if you back into someone’s garage or mailbox while transporting a passenger.
But coverage provided by a rideshare service is limited, and deductibles can be high. For instance, it won’t necessarily pay for repairs to your vehicle if you hit another vehicle or object, or a tree limb falls on your car. While some rideshare services provide coverage in these cases, it’s usually contingent on what type of coverage you have on your personal policy, and it doesn’t apply unless you’re driving to pick up or are actively transporting passengers.
Even in situations when TNC rideshare insurance covers you, your deductible could be as high as $2,500. Certain insurers that offer rideshare add-ons for personal policies, such as Progressive, may reimburse you for a portion of the deductible if your personal auto policy deductible is lower.