Carsharing and Auto Insurance: What You Need to Know

Carsharing is one example of an innovative economic model of the new economy. It lets vehicle owners make a bit of extra income by renting out their cars to customers. It also lets those who don't want to buy a car have access to one on a temporary basis.

Both scenarios can work well, but it's important to know the implications for car insurance. After all, accidents happen -- and you want to make sure you and your passengers are protected.

Your Coverage as Owner or Driver

Insurance coverage for carsharing depends on the kind of service and the individual company. If you are using a peer-to-peer service like Turo to rent your car others, that company's commercial insurance applies when the car is in use by a renter. Whenever you're driving a shared vehicle, owned directly by a company like car2go, you're protected by that company's insurance.

In Ontario, commercial fleet coverage has been approved for the peer-to-peer loaner companies Turo, Outdoorsy and ShiftRide. The government notes that insurance protection might be limited for other companies that offer a similar service. For that reason, those who choose to list their cars on these other services should exercise caution.

Your Personal Insurance May be Affected

In the event you're renting your vehicle, you still have to inform your personal insurer. How the commercial fleet insurance and your own work together depends on the company. Your personal insurance may cover you whenever you use it as normal; but the carsharing insurance may apply when you're delivering your auto to the customer and during the rental period.

It's important to note that your personal insurer may not approve your carsharing endeavour. They can attempt to cancel your policy. They may also deny a claim later on if you didn't let them know about your participation. Some companies may increase your premiums for your personal policy -- the intent is to provide extra insurance that is on top of the commercial fleet insurance.

You May Incur Costs Even When Covered

When you are renting a car through a service like car2go, or Carshare Atlantic, the vehicle is owned by the company and covered by its insurance. You may have the option to choose the kind of insurance. Carshare Atlantic, for example, gives you the option to choose the deductible you want. The company states on its website that your liability is restricted to this amount, but for all companies it's a good idea to read the contract in detail before signing up.

You should always know the entire terms of your participation in the program. The company may void your coverage if you've violated other rules or guidelines of renting a shared vehicle.

Making Sure You're Protected

If you're ready to participate in a carsharing program, you might want to explore other options for personal auto insurance.

Check out car insurance quotes on Insurance Hotline to see what other companies offer. Then you're ready to hit the road with the best coverage in place.