Sorting out liability for car sharing services

Alabama residents may be interested in an article discussing the insurance implications of car sharing services that have been becoming more popular. In this new business model, liability for accidents is not always clear.

Two types of car sharing services are in use today. One, popularized by ZipCar, is a fleet model wherein costumers access a fleet of vehicles owned by the company for an hourly rate. The other, a peer-to-peer model used by services like RelayRides, allows customers to rent cars owned by other customers. Car sharing services are quickly gaining popularity, but state auto insurance laws are not keeping up. So far, only Washington, Oregon and California have altered their insurance laws to specify when liability for the owner of the car ends and liability for the renter begins. In other states, questions remain as to who is financially responsible in the event of an accident with peer-to-peer services.

One insurance industry official recommends that those who rent their cars to others have a commercial insurance policy, as they are using the car in a for-profit venture. Other experts recommend ensuring that such a use is covered by the existing policy, as many insurance companies will not cover cars that are rented for money. Additionally, some caution that the amount of coverage must be sufficient, especially for high net worth individuals. If the policy is only covering the bare minimum required by law, this may not be enough to satisfy an accident injury claim.

When a negligent driver does not have adequate insurance coverage, they may be liable for damages beyond what their coverage provides. An attorney who has experience with car accidents may be able to recover compensation from the liable party through a civil lawsuit.

Source: Forbes, "Beware The Liability Of Sharing Your Car With Strangers", M.P. McQueen, October 15, 2013

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