Enthusiastic About Car Sharing? Your Insurer Isn’t

Excerpt from an article in

The New York Times

Saturday, March 17, 2012

Enthusiastic About Car Sharing? Your Insurer Isn’t

By RON LIEBER

At first glance, the idea of person-to-person car sharing appears to be the perfect solution to any number of problems.  

People with idle cars (and most cars are idle most of the time) can make some money by renting them out to others who need a car sometimes but not often enough to own one. At some point, the world would ultimately need fewer cars and places to park them. It feels greener, and sharing is polite and all that.  

But then the grown-ups show up, in the form of insurance companies. I called them this week in the wake of an announcement by RelayRides, a company with venture capital backing from both Google Ventures and General Motors, that it was taking its car-sharing service national.

And the grown-ups are not pleased. They want you to know that RelayRides insurance won’t be adequate in the event of a catastrophic accident and that your own insurance company may take away your insurance if it even hears that you are lending your car to someone in exchange for a few dollars an hour.

So anyone considering this sort of thing has to ask: Is the insurance industry overstating the risk of playing along with this cutting-edge idea, is RelayRides underestimating your exposure, or both?

RelayRides is one of several car-sharing services to arrive on the scene in recent years. Getaround is another start-up, as are JustShareIt and Wheelz, a company that the car-sharing giant Zipcar invested in last month.

They’re all part of a larger “collaborative consumption” movement that has captured the imagination of a growing number of civic-minded, Web-addicted people who want to both save some money and use a bit less of the world’s resources. This includes home-sharing services like Airbnb, office-sharing services like Loosecubes and general sharing sites like NeighborGoods and Rentabilities.