The Sharing Economy and the Risks

car and home insuranceIn the wake of the financial crash of 2008, proliferation of mobile technology and some brilliant entrepreneurs the perfect storm for a Sharing Economy is occurring. Sharing of cars such as Uber and renting out space in your home with Airbnb have allowed people an alternate stream of income, but there are risks associated with these services from an insurance standpoint.

Let’s start with services such as Airbnb and the ramifications on your homeowners policy. Chances are if you are renting just one room, your home policy will find this acceptable, but it is very important to read your policy to make sure you are not voiding your contract by renting out to people. Many policies will find renting to more than 2 people unacceptable. Also be cognizant of the fact that you are renting to strangers. So it is important to have safe guards in place for your valuables. The $200 you earned renting a room out is not going to replace that $1500 ring that mysteriously disappeared when your couch-surfer departs. Airbnb is just the facilitator of this service and holds no responsibility to whom you chose to let into your home.

Uber is another story. I love Uber. I love the app and the convenience of having a car service pick me up within 20 minutes of my request, showing me who my driver is and what vehicle they will be driving. I have had great drivers and I’ve had drivers that clearly are new to the city and after a long drive through the shady parts of Philadelphia, I arrived so close to vomiting from the poor driving. This town car service is their main bread and butter but Uber has recently started offering people with larger vehicles such as mini vans the opportunity to drive for a fare.

Your personal auto policy specifically states that the personal auto policy forbids use as a taxi or limousine service. The cost of a limousine commercial policy is about four times more than a personal auto policy. It’s statistics.  The more you drive the greater chance that you will be involved in an automobile accident which is why the cost is so high compared to a regular personal auto policy.

Keep these details in mind when deciding to rent your driving services in your minivan or your couch to out of town vacationers for some extra cash.

Sometimes the risks outweigh the benefits.

One Comment

  1. John Rasiej says:

    Helpful info, Jennifer. A lot of times people do things that seem good but can have surprising consequences. Forewarned is forearmed. Thanks.

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