“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.
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.
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.
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.
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