The Sharing economy and summer travel
By: Kelly Chartash
As we kick off summer 2021 and many begin traveling to their favorite vacation spot, it is important to consider the insurance questions arising from the sharing economy.
The sharing of personal goods or property for personal gain through the internet or the use of mobile phone apps is generally known as the “sharing economy.” The sharing economy sprung up around 2008 after the financial crisis. Individuals can now share their homes through Airbnb and Vrbo and share their cars through Uber, Lyft and Turo. Individuals can even share their couches through Couchsurfing.
Most homeowners’ policies exclude claims arising from the rental of any part of the insured premises, as well as losses to business property. However, those exclusions can be different from policy to policy, as some policies allow occasional rentals or rental income under a specific amount. As a result, Airbnb started offering “Host Protection Insurance” as primary liability coverage of up to $1 million. Vrbo similarly offers liability insurance coverage of $1 million. Airbnb also offers “Host Guarantee Insurance,” covering property damage from guests up to $1 million. Therefore, it is important to consider the potential insurance coverage available for claims made involving property sharing.
Ride-sharing companies, such as Uber and Lyft, also introduced the sharing economy to the transportation world and, in turn, created new insurance coverage issues. Many automobile policies exclude coverage for “ride for hire” and other similar business use exclusions. As a result, many states, including Georgia, enacted ride-share statutes. Georgia’s ride-share statute, O.C.G.A. § 33-1-24, prescribes specific amounts of liability insurance a transportation network must maintain depending on whether a passenger is in the vehicle. During the time a ride-share driver is logged on and available to accept a ride request until the driver logs off (known as Phase “A”), the transportation network company must provide a minimum of liability coverage of $50,000 per person and $100,000 per accident for bodily injury coverage and $50,000 for property damage coverage. O.C.G.A. § 33-1-24(b)(2). During the period of time from when the ride-share driver accepts a ride request from the transportation network until the driver completes the transaction or the ride is completed, whichever is later (known as Phase “B”), the transportation network company must provide a minimum of $1 million in liability insurance for bodily injury and property damage per occurrence and at least $1 million in uninsured motorist coverage per incident. O.C.G.A. § 33-1-24(b)(3).
As a result of this legislative action, ride-sharing companies’ websites and apps include specific pages describing their insurance coverage. Lyft provides primary insurance of $1 million for third-party auto liability claims “when the app is on, picking up passengers or during rides.” Lyft offers third-party liability insurance coverage for accidents “when the app is on, waiting for a ride request” if the driver’s personal insurance does not apply. Lyft’s website also notes that policies may be modified to comply with state or city insurance requirements. Uber’s website similarly sets forth its insurance coverages based on whether the driver has the app on and is waiting for a request, on the way to pick up a rider or while a rider is on a trip in the driver’s vehicle.
Another type of ride-sharing platform is Turo, which allows vehicle owners to rent out their vehicles for someone to borrow for a few hours. This is appealing for someone who does not want to rent a vehicle through a rental car company but instead wants to use a vehicle just for a few hours when on vacation or on an errand. Turo offers up to $750,000 in third-party liability insurance coverage from Liberty Mutual. Turo also offers different levels of vehicle protection plans.
With travel increasing over the summer, it is important to investigate claims for other potential insurance coverage and potential fraud. For instance, recent headlines include the case of an Australian beauty mogul charged with attempted insurance fraud after she tried to claim that an Airbnb guest trashed her house and stole her designer clothes and jewelry.
Investigation of these issues can be conducted through examinations under oath or recorded statements inquiring into the purpose of the individual’s stay at the property or use of the vehicle, as well as their relationship with the vehicle or property owner. Document demands also assist with the investigation to determine if any payments were made or received between the parties during the time period of the loss. These are all important tools to use when considering the sharing economy and its implication on insurance claims.
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