Car-Sharing Insurance – Are You Covered?

pictogram image on the street of a blue car with two people entering on either side, representing 'car sharing'

Recently, car-sharing has taken off across Canada. You can “borrow” or rent a car for a fee determined by how long you use the car. Some of the most popular car-sharing companies are:

  • Car2Go
  • EVO (in BC only)
  • AutoShare (in Toronto only)
  • Zipcar
  • MODO

Car-sharing works great if you don’t want to deal with the stress (or expense) of car ownership, including parking, maintenance and all those other fees that add up over time. Plus, less vehicle ownership is great for the environment and for reducing traffic congestion.

Generally, these car-sharing services charge a per minute or per hour or per day fee. Some also charge a membership fee. Your parking, insurance, and fuel can be included by some companies, but for other’s, you’re still responsible for covering some of these expenses.

But what happens if you’re involved in an accident? Are you covered? Will you be paying out of pocket to repair the car-sharing vehicle or for injuries?

 

Car-Sharing Insurance

The company providing the car-sharing service also supplies insurance. It’s generally included as part of the rental cost, although it may be an additional fee (for example, Car2Go charges a $1 fee for insurance each time you rent a car). This coverage is generally centred around third-party liability insurance: covering the costs associated with property damage and injuries if you cause an accident behind the wheel of your car-sharing vehicle. However, there are some conditions:

  • You must be in compliance with the terms and conditions of the service
  • You must have been the one driving (if using your account)
  • Your driver’s license is valid
  • You are responsible for a deductible (usually $1000)
  • You notify the car-sharing service immediately of any incident

You may also be held liable for any excess losses that exceed the insurance coverage offered by the car-sharing service. What does this mean? If your car-sharing service covers $1 million in third-party liability but you’ve caused an accident that has caused $2 million in damages and injuries (including legal expenses if you’re sued), you’d be on the hook for the extra $1 million not covered. That’s why continuing to have personal car insurance can be a good idea, depending on the amount of protection provided by the car-sharing service.

What if you’re not at fault? In that case, the driver who is at fault should have third party liability insurance to cover these expenses.

Additional Car-Sharing Insurance Coverage

Regular users of car-sharing services could benefit from¬†additional third-party liability insurance. This can help you cover the gap between what the car-sharing service will cover and the true cost of an at-fault accident. Like the example above, if the car-sharing service provides $1 million in third-party liability protection but all the costs add up to $2 million… you’d definitely hope you had your own third-party liability insurance to protect yourself financially!

Talk to one of our brokers to learn more about car-sharing insurance and third-party liability. It’s always better to know what your options are and be prepared before an accident happens.