How Insurance Companies View Personal Car Leasing
The emerging industry of personal car leasing has raised many questions as to how insurance companies should address the situation of coverage for drivers other than those who hold the policy. Hailed as a way for individuals to make a little extra income from a vehicle they aren’t using, the concept is received with less than enthusiasm by insurance providers. It isn’t hard to understand why.
The Business of Personal Car Leasing
There are several companies attempting to solicit individuals who are willing to allow perfect strangers to drive their vehicles in exchange for rental fees. The first impression might be “what a great way to get money for doing nothing,” but a closer look might bring out the reality of personal liability if something goes wrong.
If you rent to a driver who goes out and runs over someone, who is going to be responsible for the damages?
The organizations that offer this peer-to-peer sharing are expected to have the insurance questions handled through a large umbrella policy. Whether this actually covers the car owner or not may not be clear in every situation, and the limits of that coverage might be exceeded in certain cases.
Even million dollar coverage might not be considered enough when a disastrous mishap occurs. If the insurance provided is exceeded, who is going to pick up the tab for that excess?
What Might Make the Owner Liable
Sharing a vehicle with many different people opens the owner and the vehicle up to scrutiny. A renter might question the mechanical state of a car if he has the misfortune to crash it into a large building. If the tires aren’t brand new, the steering is a little tight, or the brakes don’t stop on a dime, the owner, not the insurance company, might be held accountable.
The Car Owner’s Insurance Company
Insurance companies don’t like the liability that comes from allowing anyone to drive a vehicle they have covered. It is not out of line for providers to drop clients because of the exposure and risk involved. Three states do not allow insurance companies to drop policyholders for renting their cars and these are California, Oregon, and Washington. If you live anywhere else, you might be shopping for another carrier if you are determined to hire out your automobile.
Instead of paying your premiums with the money you make from leasing the car, you may have to add more to it just to get coverage on yourself. Personal car leasing may well turn out to be a money loser rather than a money maker, so proceed with caution.