DOI Issues Consumer Alert on Car-Sharing and Ride-Sharing Services ...

The Massachusetts Division of Insurance has issued a Consumer Alert on the subject of Car-Sharing and Ride-Sharing

Services. The alert stresses the importance of understanding the risks of participating in a car-sharing or ride-sharing

service as well as the insurance pitfalls. We‘ve included the entire text of the alert in this edition of The Massachusetts

Agent. If you would like to print the alert with the official state seal to share with your clients, click here.

Using your own automobile for “car-sharing” or “ride-sharing” has become a popular practice in Massachusetts. It seems

like a great example of the innovation economy. Letting someone else drive your otherwise-idle car, or using your own

vehicle to transport another rider for an agreed-upon price — what could go wrong? Actually, a lot!

Understand the Risks

Car-sharing services facilitate the rental of your personal vehicle in exchange for a payment. Ride-sharing services

create a marketplace where persons in search of transportation are provided rides in privately-owned vehicles for an

agreed upon fee. There are many car- and ride-sharing programs now being offered in Massachusetts. Before you sign

up with a program like one of these, however, be sure you know the potential risk that you are accepting, and

understand whether your existing insurance coverage will protect you in the case of an accident or injury involving

your personal vehicle.

Whether you are sharing your car with someone you do not know, or providing strangers a ride in your car for a fee

or other incentive (for example, gift cards, gift certificates, etc.), there is a risk that accidents by those drivers or injury

to those passengers may not be covered by your insurance. Your insurance policy provides coverage for your vehicle

when it is used by you, another household member, or another person who has your direct permission to drive your

car. Most Massachusetts insurers will not consider using your vehicle for a car-sharing service “permissible use,” and are

unlikely to cover claims arising from such use.

An insurance policy is a contractual agreement, and all insurers in Massachusetts will deny coverage should an

incident occur if you use your vehicle to provide rides to strangers for a fee or other economic inducement. Most

insurers in Massachusetts will also exclude coverage when you “rent” your car to another driver through a car-sharing

service. Even if your insurer does not explicitly exclude coverage if you participate in a car-sharing service, your

insurance policy may be non-renewed if your vehicle is involved in an accident while being used in this manner. You

should always familiarize yourself with your own insurance contract to understand what your policy covers and what it

excludes.

Car-sharing companies may offer some insurance coverage, but probably with limitations and exclusions. Also, claims

are likely capped at the car-sharing company’s coverage limit. If the costs associated with an accident exceed the cap,

you could be liable for the remaining cost of the damages or the medical care required by the injured party or parties.

If you are renting a “car-sharing” vehicle, you may not be insured for that vehicle unless the car-sharing service

adequately covers drivers’ activity, not just vehicle damage, while driving a rented vehicle. That means if you, as the

renter, get into an accident, you may have to pay out-of-pocket for injuries or damage to the rented car which result.

And if the car-sharing service’s insurance coverage limit is lower than the cost of all damages—a situation which could

occur if there are multiple passengers who are all badly hurt in an accident—you may be personally liable for those

costs as well.

Review Your Policy Carefully

It is always wise to consult your agent and/or insurer when considering something that may affect your insurance

policy. This is especially true for a “car-sharing service.” Most Massachusetts insurers explicitly prohibit making your

car available for rental for a fee or other economic inducement (see the “public or livery conveyance” exclusion in the

standard Massachusetts auto policy). Violating this prohibition could invalidate your policy. Read your policy

carefully—and review the policy of the car-sharing service. Check if there are exclusionary clauses in either policy

which will leave you open to liability. Ask your agent and insurer about the potential risk, to make sure you understand

how your insurance will be impacted. You should also review the agreement offered by the ride- or car-sharing

company carefully, as there may be important information about insurance coverage in this agreement. Make an

informed and educated decision before you choose to share your car or another person’s.

Contact the Division of Insurance

The Division of Insurance is always available as a resource for your insurance-related questions. If you have

experienced insurance-related problems with a car-sharing service, or want to know more about the insurance risks

of car-sharing or ride-sharing, call the Division’s Consumer Services Unit toll free at (877) 563-4467 or visit us at

mass.gov/doi.