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From hitchhiking to carpooling to car and ride sharing, the options for how consumers choose to get from point A to point B via automobile have rapidly evolved in recent years. Much has been written about Uber, Lyft, RelayRides, and other mechanisms. This article examines a more recent European entry into the ride sharing marketplace, BlaBlaCar, and how its importation into the U.S. might impact the insurance industry.
Car sharing is a concept designed to fill the gap between owning a car and renting a car on a daily or weekly basis. The appeal is to have access to an auto for only a specific errand (called a “micro rental”), which is promoted by its supporters as a way to save money (for renters), make money (for owners), and help save the planet (by allegedly replacing 14 autos on average with one). The question is, what are the insurance implications?
In response to the proliferation of Transportation Network Companies (TNCs), commonly (if erroneously) referred to as “car sharing,” ISO has introduced three new PAP endorsements and one new PUP endorsement that strengthen the “public or livery conveyance” exclusion while providing a couple of PAP options for covering a portion of the exposure.
When your insured rents a car is the coverage provided by his/her personal auto policy primary or excess? The reality is, there is no one answer. The answer is a function of state law. Policy wording makes the PAP excess, but the rental agreement makes the insured’s PAP primary. Since there is disagreement, we have to turn to state law. Does state law require the rental car company to provide coverage to the renter? If so, then the PAP is excess; if not, the PAP may be primary (because excess of nothing (as stated in the rental agreement) is primary).
When I Googled “should I buy the rental car damage waiver, I got 40,600,000 hits. Needless to say, much has been written about this issue. What needs to be said is that much of what has been written is bad advice. If you have auto insurance, is that good enough? What about credit card coverage? This article explores the issues and suggests some answers, at least one of which you might not like.
“Should I buy the damage waiver?” A question you probably receive from your clients on a regular basis. What do you tell them? Is it worth the money?
According to one insurer using the ISO PAP, only the named insured is covered when renting a vehicle from a rental car agency, not any other family members. Another insurer said that there was no loss of use coverage (e.g., the cost to rent a car) if the insured's auto was being driven by a permissive user. Is this correct?
Several years ago, I wrote an article called ''The Top 10 Reasons to Purchase the Rental Car Company's CDW/LDW.' This article and a downloadable consumer version you can share with your clients has now been updated to include yet another reason for purchasing the CDW/LDW. It's called 'diminution of value' and it could cost your personal and commercial lines insureds THOUSANDS of dollars.
We had an insured call to advise that he was going on vacation and renting a car in his name. He has a 19 year old that he understands cannot drive the rental car, by the rental car company's requirement. However, he is planning on letting the 19 year old drive the car anyway. His question was would his personal auto policy respond. I guess my common sense might be getting in the way of the legal application of the policy, but I hesitated to say yes because he is clearly in violation of a written contract. Would the personal auto policy respond?
Americans approach vacations with our usual zest and creativity – which often makes for some interesting and unusual insurance exposures. Each summer, thousands of vacationers take to the open roads in rented motor homes. This raises a number of insurance issues regarding personal auto and homeowners policies.
'Question: My personal auto policy client is going to rent a motor home for an upcoming vacation. In trying to find out if the PAP covers the motor home, I've called the company three times and gotten three different answers.' Does this question sound familiar? How have you responded to such questions from your insureds?
Although most damage waiver fees are considered outrageous, the insured is best advised to purchase the waiver for short-term rentals. This is not only in the best interest of the insured, but also the agent since an inadequately covered loss may result in the loss of an account or worse, an E&O claim.
Zipcar is an innovative alternative to traditional car rental. The company describes itself as a “car sharing” company instead of a car rental company. The company currently operates in multiple metropolitan areas and hundreds of college campuses, has a fleet of thousands of cars and hundreds of thousands of members, and recently expanded internationally. If your insured drives a zip car, does his or her PAP extend coverage? Does s/he even need PAP coverage?
​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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