Insurance & The New World of Car-Sharing

In the wake of the green movement and the country’s current financial situation, a bevy of cutting-edge companies have arrived to meet the needs and desires of today’s consumer. As recently reported in the New York Times, one such company is RelayRides. RelayRides is a car-sharing service where one’s personal car is rented to others on an hourly or daily basis for a fee.

The car-sharing concept keeps fewer cars on the road, helps those who can’t afford cars, and brings financial benefit to those who have idle cars. It sounds like such a great idea that Google Venture and General Motors have backed RelayRides, and the company is poised to go nationwide. As with all popular ideas, there are already competitors, including companies like Getaround, JustShareIt, and Wheelz.

However, our San Francisco car accident attorneys understand that there is an issue that needs to be addressed regarding these programs: car insurance.

Most car insurance companies do not cover claims that arise from incidents where a personal vehicle is being used for commercial purposes. To cover this gap, RelayRides provides $1 million of liability coverage, but it may not be adequate in the event of a catastrophic accident. This means the owner of the vehicle is liable for any judgment amount that exceeds $1 million. As most experienced California personal injury attorneys can attest, when accidents involve serious injuries or even death with multiple cars and multiple victims, the chances of damage exceeding $1 million is ever-present.

What happens if the owner fails to take good care of the vehicle, contributing to an accident while the vehicle is being shared?

RelayRides’ “Terms of Service” state that the company disclaims any warranty for fitness of a particular purpose. However, according to the company’s general counsel, other sections in their terms override that statement. Further, new laws are being enacted stemming from these arrangements. For example, an Oregon law specifically allows car-sharing companies to go after vehicle owners who have materially misrepresented the maintenance of their vehicles. However, according to RelayRides’ insurance broker, Bill Curtis, despite this type of law, the owner of the vehicle will still have insurance coverage.

The greatest obstacle to putting your car in a share service, though, may well be the reaction of your insurance company. Many major car insurance companies will refuse to renew your policy, or even cancel it when they learn of the sharing.

Our Bay Area personal injury attorneys are also concerned with what car insurance companies will do if they find out a person has been car-sharing. The Insurance Information Institute spokeswoman Loretta Worters said she believed insurers would most likely not renew the holder’s policy or may even rescind the policy. Worters predictions were validated by some insurers, including USAA, whose spokesman said that participation in car-sharing would generally lead to non-renewal. Similarly Allstate’s spokesman Kevin Smith said car-sharing could lead to non-renewal as it inherently changes the risk profile of the vehicle. A few other insurers have not yet reached this conclusion and are still debating the ultimate effect.

Yet, local car-sharing residents have some protection from being dropped by their insurer. To guard against the general trend of nonrenewal, states are beginning to pass laws prohibiting insurance companies from dropping coverage solely because of car-sharing. California, Oregon, and Washington have passed laws for this purpose.

Overall, this is an area of the law that is still evolving. If you are considering car-sharing or have been injured in an accident involving one of these cars in our area, it is prudent to consult an experienced San Francisco car accident lawyer as soon as possible. The legal professionals at Callaway and Wolf are here to help all those throughout our area facing these issues. Please feel free to send us a message online or give us a call today.