Insureds trying to make money through vehicle sharing programs best read their new insurance policy carefully. Agents, too, may want to be up on the new endorsement to the Massachusetts automobile insurance policy approved by the Division of Insurance. This new endorsement that can be added to the personal auto policy states:
“We will not pay any claim for injury or property damage under the policy, while your auto is being used in a personal vehicle sharing program. Such programs or the use of your auto by a person other than you or a household member under an agreement and with payment to you. This exclusion does not apply to personal injury protection.”
Vehicle sharing programs or ridesharing peer-to-peer networks are proliferating at a rapid-rate. Companies such as Rideshare, Lyft, Uber, RelayRides, FlightCar, and Zimride operate throughout the Boston-area, but there are hundreds of vehicle sharing peer-to-peer vehicle sharing networks operating on the Web and around the Commonwealth and country. Their business models come in all flavors: virtual taxi service (Uber), airport car rentals (FlightCar), personal rental (Lyft), carpooling (Zimride).
Whatever their target market, all of these companies basically offer peer-to-peer networking through smart phone apps to connect vehicle owners looking to make some money off their cars to operators or passengers who need a vehicle to use or someone to drive them somewhere.
For now, this new endorsement appears only to affect the optional coverage of the owner who is lending his vehicle through a vehicle sharing program. A renter who has their own automobile coverage should still have their optional coverage apply since they are using the shared vehicle with the permission of the owner.
Since vehicle sharing programs target their money making pitches to private vehicle owners (“Earn up to $1000 a month renting your car”, advertises the RelayRides website), the new endorsement is designed to clarify that a Massachusetts personal automobile policy does not cover renting out one’s automobile as a business.
These type of vehicle sharing programs are likely to get much larger and much more common before their full effect becomes clear. But venture capitalists are not waiting. Uber raised $258 million in August from Google Ventures and Lyft raised $60 million from another venture firm in May as well as selling Enterprise Rent-A-Car, its Zimride service for an undisclosed price.
Agents would be wise to follow the development of these services closely for their insureds because they have the potential to become a game changer for established industries from taxi and livery services to car rental companies. It seems to me, that this developing car-sharing industry has the theoretical potential of reducing the size of the automobile insurance market, since more cars shared means fewer cars insured.