CarSharing Tips

Posted & filed under Advice & How-to, insurance news.

If you live in a major city like San Francisco, Seattle, or New York, you’ve probably heard of car-sharing clubs even if you haven’t actually used one. For people who live truly urban environments, where cars aren’t necessary every day, such clubs are great for large shopping trips or other times when using mass transit just isn’t efficient. Nevertheless, not all car-sharing clubs are created equal. Before using one, here are some questions you should ask:

  1. How much car insurance coverage is included? Almost all car-sharing clubs provide some insurance coverage to members who are renting cars, and such coverage is usually included in the rental fee, but some clubs only provide the legal minimum amount of coverage for property damage and third-party bodily injury for the state in which you’re renting the vehicle – coverage that could be as low as $25,000 or even lower, which may not be enough coverage to protect you if you’re in a multi-car crash. This is problematic, because if you’re at fault in an accident, the damages may exceed the amount of coverage. Unfortunately, car-sharing clubs don’t generally give you the option to upgrade, so be certain to choose a company that offers at least $1 million in coverage, per rental.
  2. Is there a risk to my personal assets? While most people who use car-sharing services don’t own cars of their own, many do own houses or businesses. Those assets, as well as others, could be at risk if the car-sharing club doesn’t provide adequate insurance. Be aware that even if there is enough coverage, you may have to pay for damages over and above it, and there will almost certainly be a deductible. How much will that be? Well, the average is between $500 and $750.
  3. What if I have my own insurance? If you carry collision coverage you might be covered when you drive someone else’s car with their permission, including car-sharing rentals, at least with some companies, says Dick Luedke, a spokesperson for State Farm Insurance, once of the companies that allows such an extension of coverage. Not all insurers allow this, however, so check with your own insurer before making any assumptions.

The bottom line is: if you’re going to use a car-sharing service, check with your state’s department of insurance or your insurance provider to make sure the insurance provided by the car-sharing company is enough to keep you and your assets financially secure.