Sharing economy services are a great way to make or save money. But when dealing with expensive assets like homes and cars it’s important to make sure you’re covered by insurance. In the context of peer-to-peer travel services, there are two major categories of insurance to think about.
(1) Liability insurance. This covers you if someone is hurt while staying in your home or if someone is injured by your rental car while you are driving. Consider, for instance, this sad cautionary Airbnb story.
(2) Property insurance. There are three property insurance scenarios relevant to sharing economy travel services:
- Insuring your property when you are hosting people in your home
- Insuring your auto, boat, RV, recreational gear or whatever else you rent out in case it’s damaged or stolen
- Collision insurance if the car you are renting is in an accident
Are you covered by the sharing economy companies?
When Airbnb first started they didn’t offer insurance, and people learned that their home owners or rental insurance policy didn’t necessarily cover them when renting out their home. After a few disasters Airbnb introduced a $1 million host protection insurance policy. Other peer-to-peer rental networks may or may not offer insurance, always check before you decide to rent out your home through one of these websites.
Peer to peer auto rentals may be covered by your personal liability and collision insurance. Credit card auto rental insurance generally doesn’t cover peer-to-peer rental companies. If you don’t own a car, or your insurance doesn’t cover this type of rental, most of these rental businesses offer optional insurance for purchase.
Some home exchange companies offer house swap insurance for purchase on a one-time use basis. And a few of these offer it for free as a part of membership in the network. A few years ago I wrote an extensive post about whether or not you need insurance for a home exchange. I think my conclusion (no) is still valid. Your home owners insurance should cover you for free guests, but it’s good to double check as laws vary by country and company.
Companies that rent out recreational gear: Boats, camping equipment, RVs, etc may or may not offer insurance. You should always check to see what coverage is offered before renting through these peer-to-peer services. Make sure you’re comfortable with the level of insurance offered, both when renting out your own gear, and when renting gear for personal use.
Here I want to interject an interesting and somewhat relevant side note on insurance needed for those working as peer-to-peer taxi drivers. Uber, Lyft and other peer-to-peer taxi companies started off claiming they didn’t need to think about insurance, putting it off on the drivers who, they claimed, were responsible for this as contract workers. But these companies also tried to downplay the issue with their drivers. I personally know of one woman who went to an Uber driver orientation planning to work for them. She raised the question of what she should do about insurance since her personal auto insurance might not cover her as a professional driver. She was escorted out and told not to come back. I see Uber now offers liability and possibly some collision insurance for their drivers while they are working. And many auto insurance companies are offering add-on insurance for drivers.
New companies focused on sharing economy insurance
There’s a new buzzword in insurance: insurtech. Insurtech companies are offering innovative insurance products, many of which are applicable to sharing economy businesses and individuals working for or with these businesses. Here’s a sampling of new companies that have launched recently in the UK, Australia and the U.S.:
- Belong Safe launched in 2016, offering host home insurance in the UK.
- ShareCover is an Australian insurance company providing services to people renting out their assets through the sharing economy.
- GuardHog offers a full suite of products to insure people using sharing economy services in the UK including hosting guests, storing stuff, and working one-off tasks.
- Another UK business SafeShare insurance, sells products to sharing economy companies to protect users and products.
- Slice is offering on demand home share and ride share insurance in the United States. Slice launched in 2016, and in October 2017 they raised $11.6M in Series A funding.
- For a short while Peers was an organization offering insurance for sharing economy workers. It looks like they have folded. I’m not sure if there’s anything to learn form this about the viability of insurance products for this sector.
How are traditional insurance companies adapting?
Traditional old-school insurance companies are starting to offer products relevant to the sharing economy. Last year Allstate piloted insurance for peer to peer home rentals. And as I mentioned above, many auto insurance companies are now offering insurance specific to peer-to-peer taxi drivers. ShareTribe has a good overview of the options offered by some insurance giants, along with the smaller new players.
There’s definitely money to be made in sharing economy insurance. It remains to be seen whether the existing insurance giants can work out how to get involved, or if a new type of company will dominate this space. Either way, don’t get caught without insurance for your major assets, including your own personal liability.