“Sharing Economy” businesses, such as Uber and Airbnb, are engaging eager business-minded individuals across the globe at a rapid rate. These “gigs” have grown in popularity due to their ability to help people earn a few extra dollars at their convenience. As demand for these user-friendly home and ride-sharing services increases, the insurance industry is striving to understand the potential gaps in coverage that customers could experience.
Ride Sharing: What Are The Risks?
Serious coverage gaps have insurance companies aiming to define the fine line between personal use and business use within auto policies. “Most policies do not provide coverage when a person is being paid to transport people for a fee, most people don’t realize that. Even if you’re delivering pizzas, you’re working, so there are exclusions for that,” explains Mike Habryle, V.P. of Claims at Grange Insurance Association (GIA). Auto insurance policies are built to address certain risks (driving times, locations, etc.), and misunderstanding your policy’s coverage can be expensive. Larger ride sharing companies have policies for their drivers covering liability (used for damage or injury to others), commercial auto, and collision coverage. Most offer a $1 million limit on primary liability coverage and several claim they use excess policies to fill most coverage gaps. However these excess policies can lack coverages such as comprehensive and collision that you may need to pay for damage to your own vehicle.
“It would be great to say, here is where your personal policy ends and the commercial policy begins,” stated Frank McConnell, V.P. of Product Management at GIA. Yet companies like Uber and Lyft are not an easy business model to measure. The dangers drivers are exposed to increase with the amount of time they drive, where they choose to drive, and how frequently they are on the road.
Protect Yourself as a Driver
- Talk to your independent insurance agent to see if your policy covers ride sharing programs and if there are any exclusions.
- If you are considering driving for a ride share company, ask your agent if there are special coverages you can purchase.
- Stay up to date on state laws and policy language of your personal insurance carrier.
Protect Yourself as a Rider
- Find out about specific coverage provided by the ride share company you are using.
- Ask your agent if your primary insurance responds if you’re injured while riding.
Home Sharing: What Are The Risks?
The attractiveness of home sharing programs is apparent. A homeowner can earn extra income by renting out all or some of their home, while leaving much of the management to the home sharing company. Yet, what are the dangers? In most regards, these home-sharing companies are much like a bed and breakfast or a hotel. The difference is, the homeowner’s insurance covering your home does not apply to these paid guests. Instead you will need to plan around the coverage provided by the home sharing company. For instance, Airbnb covers primary liability for up to $1 million for 3rd party bodily injury or property damage. But their policy does not provide personal liability coverage for injuries, coverage in shared or common areas, coverage for injuries to pets, or coverage for cash or valuables.
Protect Yourself as a Host
- Read the fine print for the home sharing company you use. Also ensure that you stay up to date because these policies can change frequently.
- Rent to guests who have homeowners, renters, or personal liability insurance and can show proof. This makes it simple to file a claim under their policy if property is damaged.
- Request a damage deposit.
Protect Yourself as a Guest
- Protect yourself with homeowners, renters, or personal liability insurance policy and a damage deposit.
- Read the fine print for the home sharing company because it can change frequently.
At Grange Insurance Association, we care about informing the communities we serve about the ever-changing world of insurance and their coverage options. Talk with your independent insurance agent about what your policy covers in relation to auto sharing and home sharing. For more insurance topics, stay tuned to our blog.