RelayRides lets people rent their car to others. The owner sets the price while the company performs background checks on the renters, takes reservations, and collects payment. After payment is received they keep their share and send the rest to the individual renting their car.
Most people would see this as a liability issue so RelayRides provides each car owner with $1 million of liability insurance. They do this as insurance companies may deny coverage for damage sustained when a car is technically being used for business when rented out to others for pay. Some companies do not like the idea of car sharing and may not renew if they learn a customer is doing so.
When contacted in March, someone from RelayRides said that there have been no issues with anybody losing their insurance. But they failed to mention an ongoing issue. One renter ran into a car and died, while the 4 people in the other car were all badly injured. They claim he was traveling South in a Northbound lane. According to one lawyer, the total of their claims could exceed $1 million. The excess over the $1 million may or may not have to be paid by the owner of the car, Liz.
The incident occurred in February. Liz received a call that her car was totaled, received a check to cover the cost of getting another vehicle and thought that was the end of it. But, in time, she got a call from her insurance company. They became involved when contacted by a lawyer for one of the car crash victims.
Aside from needing to be reimbursed for medical expenses, the 4 victims could file suits for pain-and-suffering. Some of them may, for example, be uneasy about getting into a car after being struck by someone going the wrong way.
The driver renting the car was most likely at fault. There is $1 million of liability coverage from Relay Rides and Liz has $300,000 coverage in her car insurance policy. However, the final cost of all claims and/or legal judgments is unknown. If the total does end up exceeding $1 million, the courts may have to determine who pays and how much.
RelayRides is trying to convince Liz’s insurance company to deny the claim. They prefer to have their clients keep their personal insurance and want to avoid companies having to pay for losses arising from car sharing. But, her insurance provider sees it as a conflict of interest. They believe she needs as much insurance as possible and it would be in her best interest if they keep investigating the claim and defend her personally.
If, in the end, the claims surpass $1 million and Liz’s car insurance company refuses to pay anything, will she have to pay? Lawyers could see dollar signs because she used to work at Google full time and now has a degree from M.I.T. but they cannot claim that Liz did anything wrong. She was not the driver and the person who was driving was not employed by her. She could be punished by a lawyer or a jury for allowing another person to drive her car… but maybe not.
General Motors and Google, who are RelayRides corporate investors, could make Liz whole with a check but neither company gave a comment on the matter. RelayRides gives the impression of wanting to do the right thing. When Liz wrote about the accident on Google Plus, they also put up a message saying, “We 100% commit to making sure that everyone involved in this tragedy is taken care of as well as humanly possible.”
In response, a lawyer was asked if a check would be given to Liz if she is found to be personally liable. The answer was, “What happens in any sort of accident with insufficient coverage? That’s the societal burden of torts that have liability where there is no insurance coverage.” That doesn’t sound good for Liz. When pressed further, the lawyer gave no other answer.
RelayRides hired a lawyer for Liz but she knew nothing about it and no lawyer had contacted her. The identity of the lawyer was found but they also represent RelayRides so he may not have her best interest in mind. But, she is doing her homework. She learned of a federal law that can protect rental car companies from any liability that may arise from an accident that occurs while the renter is using the car. However, it did not specifically mention if the law applies to those who rent their cars out to others on an hourly basis.
Despite all of this, RelayRides is not planning on increasing the amount of insurance available to renters and, surprisingly, Liz is still using the car rental company. She originally rented out her car through them because she does not use her car a lot and, being environmentally minded, likes the idea of other people using her car instead of buying their own car. Liz also has a dog and is sympathetic to pet owners who have a hard time finding rental companies that do not have objections to pets in their cars.
It is not impossible that her insurance company will non-renew her auto insurance policy unless she quits renting her car to others through RelayRides. Some insurance companies are already trying to get their customers to move away from sharing their cars while others allow their customers to continue car sharing but they are given a higher premium that will make most people think twice about continuing to rent out their car.
A lot of people might shy away from sharing their car after their car is damaged beyond repair, people are badly injured and large claims will be filed but Liz (fearless or crazy, I will let you decide) may continue to do so for as long and as often as possible. However, if her insurance company tries to get her to stop car sharing and is successful, how much time she has to do so may be limited.
Letting people you personally know (and are not on your car insurance policy) use your car is one thing but letting perfect strangers do the same is quite another. The risks involved and the possible mystery of who may be held liable for any damages and/or injuries make car sharing a very bold move. Anyone who considers loaning out their car for a set fee per hour should think very carefully before signing up. The chances may not be very high but a bad situation, like the one Liz is in now, could very well happen again to anyone.
At Filer Insurance, Inc., we have been providing Home, Auto and Business Insurance in Miami and South Florida since 1919. We would very much like to have you as one of our customers. Please give us call or come by our office for a free quote on your insurance.