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The ease of entry into the sharing economy has introduced new risks to many who would have otherwise been full- or part-time employees unconcerned by business operational liabilities. These days, just about anyone can be on either side of the equation – as a service provider or purchaser. Among the most popular of these activities are ride sharing, home sharing, car sharing and on-demand labor. Here are some typical risk solutions for them.
Uber and Lyft are the most prominent ride-sharing options. When a driver is inactive on the platform, their personal insurance covers them. While they are active but waiting to accept a customer, the driver’s personal insurance may apply. Some personal auto insurers might consider the driver as “for hire” at this point and deny coverage. For this period, in the event coverage is denied, or where liability limits are below $50,000 per injury/$100,000 total injuries/$25,000 property damage, company-supplied commercial auto coverage applies up to them. Once a driver accepts a customer, their liability is covered by a company-supplied policy with a $1,000,000 combined single limit. This includes the time en route to pick up the customer through drop-off. During this period, uninsured/underinsured motorist coverage with limits which may vary by state are active, as are collision and comprehensive (coll/comp) coverage for the driver’s vehicle, contingent upon their personal coll/comp coverage status.
Turo and Zipcar offer car-sharing services. Vehicle ownership differs between the two platforms: Zipcar owns their vehicles, while Turo’s may be privately held. Both companies provide liability insurance and do not require a driver to have their own. Zipcar liability limits depend on a driver’s age and membership-join date, with those under the age of 21 and those joining after 8/1/2018 covered by the applicable state’s minimum financial responsibility limits. Members with a join date prior to 8/1/2018 benefit from higher liability limits. Turo drivers’ liability limits may vary by state and host’s (vehicle owner’s) insurance, but will, at the least, meet state minimums. Hosts are covered for coll/comp either through Turo’s insurer of choice or by obtaining their own commercial rental insurance. Loss of rental income is also available to hosts.
TaskRabbit connects Taskers (service vendors) with Clients. Tasks can range from cleaning to construction to waiting in line (yes, waiting in line). TaskRabbit does not provide insurance. Some Taskers might offer services requiring state licensing for which insurance may be a prerequisite. On the Client end, homeowners or renters insurance will cover negligence-related injuries to Taskers. Personal umbrella and medical insurance may also apply. In cases where the Tasker and Client cannot come to a resolution, TaskRabbit provides the “Happiness Pledge,” which is specifically defined as not being insurance and is handled on a case-by-case basis. The Pledge may provide Clients with property damage coverage of up to $1,000,000 per occurrence caused by, and $10,000 due to theft by, a Tasker. All Users may be offered up to $10,000 per occurrence for bodily injury directly resulting from another User’s negligence. A number of terms and conditions apply.
Private citizens can offer short-term rentals, from a room in an apartment to an entire mansion, through Airbnb. One’s standard homeowners or renters insurance policy may provide coverage, but this can depend on the frequency with which the home or part of the home is rented. A personal insurer may view a frequently-rented home as a business risk. Airbnb provides two means of protection at no additional cost. “Host Protection Insurance” is liability coverage with a $1,000,000 limit covering personal injury and property damage. The “Host Guarantee,” defined as not being insurance, may protect against up to $1,000,000 of damage to the Host’s property. Slice offers on-demand home-share protection providing $2,000,000 in commercial liability first-party coverage, and additional home sharing-related coverages. Insureds can acquire per-night coverage for an average $7.00 nightly fee.
The sharing economy has transformed the way many of us make a living and purchase our services. As the market for shared services continues to expand, we will need to fill coverage gaps and provide the best, most appropriate risk solutions. It’s important that risk protection design and availability anticipate and keep pace with these evolving needs.
Chris Cortner is an Associate Actuary with Pinnacle Actuarial Resources, Inc. in the San Francisco, California office. He holds Bachelors of Science degrees in Economics and Biology from the University of California, Los Angeles. Mr. Cortner has considerable experience in the industry working on assignments involving loss reserving, ratemaking, rate filings, financial reporting, competitive analysis, captives, reinsurance and commutations.
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