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Car Sharing and Your Auto Insurance Policy

parking lot Companies in several states have started working with a brand new idea. Car sharing is a convenient service that allows you to borrow someone else’s car for a limited amount of time. Would you be willing to share your car? How would that affect your auto insurance policy?

It seems that having access to a car, and being able to hold a job, are intrinsically entwined in the United States. Very few people live close enough to their place of employment to be able to walk there. The majority of Americans need to drive their car in order to get to and from work. Those cars sit idle for hours while the person works.

Some companies have gotten involved in “peer-to-peer” car sharing services. Spride Share, RelayRides, Getaround, and JustShareIt are the names of just a few of these innovative companies. You would have to check to see if any of the companies, (or others like them), exist in your state. Not every state is a good match for this type of service, due to how the insurance laws work in that particular state.

What they do is connect urban dwellers who need the use of a car for a few hours, (but don’t have one), with people who have cars (but aren’t using them at this moment). In general, how it works is that a person who owns a car gets in touch with one of these companies.

They negotiate the times and days when the person is willing to share their car with a stranger. The car owner will make a little bit of money by sharing his or her vehicle. In some cases this can be around $200.00 to $300.00 a month if they rent out their car for one hour a day. Car owners have to agree to have a remote entry system installed on their car, so the company can access it in order to share it with someone.

A person who wants to borrow a car for a few hours also gets in touch with the company. They arrange to rent a car for an hour or two. The borrower pays between $5.00 and $15.00 an hour for the service (and may pay more to rent an extremely expensive car). The person renting the car agrees to not smoke in the car, to pay any parking tickets they get while using the car, and to drive the car with great care. They use a keycard or or smartphone to unlock the car they have rented. As you can see, this is a very different concept from carpooling.

New insurance laws in California and Oregon are what makes this service work. Car owners in those states are not liable for damage that a driver caused with their car while the car was being used for a personal vehicle sharing service. This will protect you in case your car is rented by someone who gets into an accident with it. Other states, however, allow insurance companies to cancel the auto insurance policies of people who use their cars for commercial purposes.

Image by Brad K. on Flickr

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About Jen Thorpe

I have a B.S. in Education and am a former teacher and day care worker. I started working as a freelance writer in 2010 and have written for many topics here at Families.com.