Insurance in a sharing economy
“Sharing economy” business models are here to stay. The insurance needed in order to operate under one of these applications can be tricky and is different than your traditional auto or homeowner’s insurance policy. In most cases, special endorsements are needed to cover these exposures.
Homesharing coverage needs
If you’re thinking about hosting guests in your associated dwelling unit (ADU) or in a secondary home, you’ll want to make sure your homeowner’s insurance policy has the endorsements you need to make sure you’re adequately covered. Your “primary policy” does not cover many situations you might encounter with short-term renters.
A typical Homesharing Endorsement added onto your homeowner’s insurance policy offers you coverage for the following types of scenarios:
Other Structures: If you have a guest house or apartment above a detached garage and it is damaged while being rented, this coverage protects these structures when they’re used for short-term rentals.
Extension of Personal Property: If a short-term renter causes an event that damages any of your furniture or other belongings, this coverage ensures your personal property on the premise is covered.
Loss of Rent: If burst pipes or other damage to your home causes you to have to cancel already booked reservations, the Loss of Rent coverage gap helps protect your rental income.
Protection from Theft: If a renter steals any of your belongings, like a television, blender, or any other personal property, this coverage protects your personal property.
Liability: If a renter is injured on your property and decides to sue for damages, this coverage protects you from a claim or suit brought to you that arises from short-term rental and also includes Personal Injury Liability and Medical Payments to Others coverage.
Property Damage to Others: If by accident you break or damage any personal property belonging to the renter while they are staying at your property, Property Damage to Others covers you against any unintentional damage.
Car and ride sharing options and needs
When it comes to car-sharing services, depending on the type of share you’re looking into, you might need different variations in coverage.
Rideshare: If you’re considering driving passengers from point A to point B using a Transportation Network Company (TNC), you’ll need coverage that protects you between when your normal auto insurance policy applies and where your TNC coverage kicks in.
When your ride-share app is off, you’re regular auto insurance policy should provide you with all of the coverage that you need. Once you turn your ride-share app on and make yourself available to pick up passengers, this is when you might have some gaps in coverage. After you’ve matched with a passenger or the passenger is in your vehicle, you may be covered by the TNC’s policy. Some Insurance companies limit the Rideshare Endorsement to passenger transportation only. Other companies will extend coverage for food delivery. If you are planning to deliver food, it’s important to confirm with your insurance agent the type of coverage provided with your Rideshare Endorsement.
Livery Insurance is available to businesses who transport people using commercial vehicles like a taxi, shuttle, limousine, or non-emergency medical transport. In some cases, Livery Insurance could be used instead of your personal auto policy plus rideshare endorsement as it covers both business and personal use of the vehicle.
Carshare: If you are thinking about sharing your vehicle, you’ll want to make sure that your personal auto insurance company allows that exposure. Even if they do, you should opt-in to the insurance coverage offered by the TNC to limit your financial exposure as owner of the vehicle.
In many cases, securing your own commercial rental liability policy might be a better option, especially if you’re thinking about renting out multiple vehicles. Each state has its own mandated minimum amounts of coverage, so you’ll want to speak with your agent to find out the best policy option for you.
Homesharing, ridesharing, and carsharing all offer ways to bring in extra income by utilizing assets that you already have. If you’re unsure about what type of coverage you need for your unique situation, our agents are always available to walk you through the policies, endorsements, or other options that will work best for you.