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Car Sharing Presents Puzzling Liability Issues

Person-to-person car sharing is a concept that’s become increasingly popular in large metro areas. On the surface, it seems like a great idea for car owners whose vehicles are sitting unused most of the time to rent them out to people whose occasional need for a car doesn’t justify owning one.  The car owner makes a few bucks in the process and the renter gets a car when the need arises.  Plus it’s a nice eco-concept that ultimately puts fewer cars on the road. The concept is so popular that the car sharing company RelayRides, which has received financial backing from General Motors and Google Ventures, has just gone national.  Other car sharing services include Getaround, Wheelz and JustShareIt.

Auto insurers, however, are anything but thrilled that their customers are renting out their cars to strangers.  Even though the auto sharing companies provide owners with additional insurance, insurers say it might not be enough to cover the cost of an accident.   Some are going as far as stating that they’ll cancel the policies of owners who rent out their cars via these programs.

Backing up insurer’s concerns about liability is the Massachusetts case of a woman who rented out her car through RelayRides.  The driver of her car veered into the wrong lane, resulting in a head-on collision which killed him and injured four people in the other vehicle.  While RelayRides provides $1 million of liability coverage per accident, plus damage coverage to replace the vehicle, the claims of the injured parties are expected to exceed $1 million.  Who’s responsible for the additional liability?  The owner of the car or the owner’s auto insurer?  Both? The truth of the matter is that since an occurrence like this hasn’t happened before, no one knows.  It’s likely that this conundrum will be untangled in court, but in the meantime, it’s something for vehicle owners to think about if they’re considering making some extra cash via a car sharing service.