Many car sharing businesses have cropped up in Massachusetts, over the last few years as part of the collaborative consumption movement. The economic and environmental advantages of car sharing can be very appealing to MA Auto owners and it can offer many benefits to the sharer and the sharee.
But what happens if something goes wrong? Sharing your vehicle may have a larger inherent risk involved then say sharing your lawn mower.
Zip Car, Relay Rides and the Logan Airport based Flight Car all claim to carry their own Liability coverage that would cover a loss. But what about the vehicle owner’s policy, how would the Massachusetts Auto Policy respond to car sharing, and ultimately the claims that are going to arise out of this activity?
ISO (Insurance Services Office) that generates and pens the forms that Insurance Companies use to file exclusions and changes of coverage with the state they are doing business has written a form specifically excluding car sharing. This form will be available for MA Auto Insurers to file with the State the Massachusetts starting in October of 2013. This form, labeled the “Personal Vehicle Sharing Program Exclusion Endorsement” would allow the vehicle owner’s policy to quickly and explicitly deny ANY CLAIM that arises out of car sharing.
Right now this is a very grey area. In February 2012 there was a fatal crash involving a vehicle rented through Relay Rides that killed the driver of the rented vehicle and seriously injured 4 people in the other vehicle. The owner of the rented vehicle Liz Fong-Jones, a MIT Student at the time received a check for the replacement cost of her vehicle which was a total loss, and Relay Rides did provide $1,000,000 in Liability Coverage for her. Her MA Personal Auto Policy (Commerce Insurance) also chose to respond on her behalf with her $300,000 in Liability Coverage during the claims process. But what if the claim had EXCEEDED that amount? Would she be personally liable for the actions of the driver that is renting her vehicle?
These are all things that need to be considered when making the decision to share your vehicle. Overall the sharing economy is a movement that needs to be embraced to maintain sustainable living. The state laws that govern and the Massachusetts Insurance Company standard practices will eventually catch up and make this much less confusing, but in the mean time it might make sense to be wary of this practice.