Many people, especially in big cities, have been ditching their cars in recent years in favor of car-sharing services such as Zipcar and Enterprise CarShare. These services, which used to be thought of as hourly rental cars, are now so convenient and widespread that they have allowed many people to forgo car ownership completely. In big, dense cities like New York, Washington, Chicago, Boston, and San Francisco, car sharing companies have pickup/drop-off locations practically on every block. In the world we live in which values convenience above all, it’s no wonder that car sharing is gaining such momentum!
While car sharing has been getting more and more accessible to your average American, the insurance issues that come along with it are still a source of confusion. Are you covered for liabilities if you get into an accident? Will the car sharing company cover your medical bills if you get injured in an accident? If your car gets damaged or stolen while you are driving it, who pays for it? These are just some of the frequently asked questions when it comes to car sharing and insurance. Below, we hope we can clear some of the air for you.
Traditional Rental Cars Vs. Car Sharing Insurance
Traditional rental car companies usually charge anywhere from $10 to $30 per day (or more) for car insurance coverage. Often times a credit card like Visa can provide free coverage, and more often than not, the driver opts out of rental car insurance completely. After all, with rental insurance rates sky high, a multi-day rental could put a dent in one’s bank account. Car sharing companies, like Zipcar, usually offer insurance to members, which cover the duration of the rental. But sometimes, this coverage is far from enough.
Issues With Car Sharing Insurance
According to the NYTimes, Zipcar caps its insurance coverage at $300,000 per accident. This, as they explain, is often times far from enough coverage, especially in an accident with multiple injuries and/or fatalities. If you drive a Zipcar, you better buy supplemental insurance or be extra careful not to get into a serious accident. If not, you could face bills in the millions!
Hertz 24/7, which is Hertz’ answer to Zipcar, has an even weaker insurance system, according to the Times. They only offer the state’s bare minimum insurance on each rental, which they explain, is far from enough.
What’s worse is that drivers under 21 get even less coverage from these car sharing companies. These drivers, which are statistically more reckless than their older counterparts, need insurance more than anyone. Still, if they get into an accident while driving one of these vehicles, they could be hurting (financially) the most.
What Car Sharing Insurance Does Cover
When you rent a car from a car-sharing service, you will always be covered with the minimum level of car insurance in your state. Having the bare minimum coverage is always the policy of the major car-sharing companies. If you pay for the car with a major credit card like Visa, Mastercard, or American Express, you will automatically get collision coverage and some level of comprehensive coverage (Check with your credit card company to be sure). Apart from that, here is the basic coverage provided by the major car sharing providers:
|Company||Liability||PIP/Uninsured Motorist||Collision/Comprehensive Deductible||Other Relevant Information|
|Zipcar||100/300/25||Yes/yes||$1,000 Damage Fee||For drivers under 21, liability insurance is limited to the state-regulated limits.|
|Hertz 24/7||State Minimum||Yes/yes||$750|
|Enterprise CarShare||State Minimum||Yes/yes||$500||Liability insurance can be increased to a $300,000 limit if you pay an hourly fee of $1.40.|
Consider A Non-Owner Car Insurance Policy
If you do not own your own vehicle, but often times rent from car sharing services or even borrow your friends’ vehicles, you could benefit from buying a non-owner policy. These policies provide liability coverage to people who don’t have their own cars. With these policies, because you are purchasing your own coverage instead of relying on other people’s policies, you have more freedom to make sure you always have enough coverage. Like explained above, car sharing services often times do not have adequate liability coverage. If you want to make sure you always have enough, a non-owner insurance plan might be the smart way to go.