Important Consumer Advisory from the MA Division of Insurance:
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.
Car-Sharing and Ride-Sharing Services
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
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