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Before you step on the gas, know who’s secured the car sharing insurance

A driver’s guide to insuring your car sharing service ride

Hitching a ride with a stranger is nothing new. It’s just legal now – and becoming big business.

Despite the legal battles raging across the country, legal car sharing is finding its way into Canadian cities. Vancouver officials are still haggling, but the city of Toronto reached an agreement with Uber about a year ago – and the service can be found in cities as diverse as London, Edmonton, and Quebec City. In fact, revenue from global car sharing services is growing quickly and is expected to reach $6.5 billion by 2024.

For millennials, car sharing is a way of life. A poll by Vancouver-based Insights West reported that millennials were less likely to drive from place to place than other age groups. For baby boomers, participating in car sharing is a way to supplement retirement funds that took a hit during the 2008 recession. A 2015 Uber study found that nearly a quarter of its drivers were older than 50.

Regardless of your age, as a driver, you’ll need to consider the risks that come along with sharing your car with others—namely proper car sharing insurance coverage. Or you could be on the hook for a lot more than just getting from point A to point B.

Are you covered when car sharing?

Car sharing offers those looking to make some extra cash an opportunity to do so without a big up-front investment—or so it seems. The problem is that having adequate coverage to protect you and your passengers should you be involved in an accident isn’t so straightforward, and since car sharing is relatively new, there’s little precedence in court to answer the question either. Consider the following:

Personal car insurance – While most car sharing companies claim that your personal car insurance policy, together with their company’s supplementary coverage, is adequate should your vehicle be involved in an accident while on the clock, many carriers and provincial/local regulators disagree. That’s because most personal car insurance policies exclude coverage for any business use of your vehicle, which means you risk having a claim denied should the insurer discover you’re hiring out your car.

Commercial car insurance – Taxis and other cars driven for business purposes have traditionally required a commercial insurance policy, and some jurisdictions have already ruled that ride-hailing drivers must purchase such a policy to be covered. However, a commercial insurance policy costs significantly more than a personal policy, and requires drivers to first obtain a commercial driver’s license.

Car sharing insurance policies – New policies – currently written by only a handful of carriers – are specifically designed to protect car-sharing drivers and their vehicles. While they may offer an optimal solution, these policies are not yet tried and true. Don’t forget to do your research and make sure to have a backup plan as well.

3 Best Practices for Ride Sharing Insurance

Ride-hailing companies view their drivers as independent contractors, or third-party vendors, that they work with. This means they don’t take responsibility for your actions. Here are a few ways you can protect yourself:

  1. Stay in the know. Understanding the insurance provided by your car sharing company requires a thorough reading of your contract, including all terms and conditions. Staying on top of the latest developments in the ride-sharing market will be critical to ensuring you’ve got the coverage you need when you need it.
  2. Get the best car sharing insurance policy possible for your money. If you’re the one responsible for an accident that costs more than your policy will cover, the other side may go after you personally. This could put your home and any savings you have at risk. Make sure you have the most robust policy possible.
  3. Consider the finances of it all. When you calculate how much you’re earning as a driver, don’t forget to factor in insurance costs as well.

Bon Voyage

Before you decide to drive for a car-sharing company, find out how your current auto policy works and what type of policy your car sharing vendor maintains. Ask your HUB broker about affordable car sharing insurance options you should consider.

Barry Hogan is president of Gamble Hub International, an insurance broker with offices in Sarnia-Lambton, Chatham Kent, and London Middlesex. Hub International has 18 offices located throughout Ontario and can be found on the web at www.hubinternational.com

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