August 08, 2016

Sharing economy exposes travelers to insurance risks

Know the risks when participating in the sharing economy

Jefferson City, Mo - As more Missourians continue to travel at the end of this summer, many may turn to the sharing economy when looking for accommodations or services. With nearly 75 percent of Americans vacationing throughout the summer, Missouri Department of Insurance Director John M. Huff, advises Missourians to understand the insurance risks of the sharing economy.

"Missourians today are not only participating in home and ride-sharing, they are also renting and sharing everything from cameras to golf clubs," said Huff. "It is important to understand the insurance aspects of these sharing services and the financial risks involved."  

Consider the following tips before entering into any sharing agreement:

Welcome Home 

  • Purchase the right coverage. Regularly renting out rooms for a profit may be considered a home-based business. As many homeowners policies won't cover property damage caused by or injuries to a paying guest, hosts should talk to the home-sharing service and their own agent to determine if additional liability coverage or special landlord insurance is needed. Some home-sharing companies offer host protection guarantees to cover disputes between owners and renters.
  • Ask for proof. Consider only renting to guests who show proof of homeowners, renters or personal liability insurance. If a guest damages rented property, hosts can report a claim on the guest's policy.
  • Review your personal policies. Consumers staying in accommodations secured through a service such as Airbnb or VRBO should confirm their homeowners, renters or personal liability insurance policies offer protection for potential damages to the rental property. If not, make adjustments as needed. 
  • Check the terms of use. Home-sharing user agreements change often. Read the fine print every time.

Taken for a Ride

  • Ask your insurer. Before contracting with a ride sharing company such as Lyft or Uber, consumers should consult their insurer. Personal auto insurance typically excludes coverage for business use or when drivers are "available for hire." 
  • Review the company's policies. Some ride-sharing companies provide primary insurance. They also offer contingent collision and comprehensive coverage that takes effect when the driver accepts a ride request or has a passenger in the vehicle. However, drivers must elect to purchase these coverages on their personal auto insurance.
  • Fill the gap. Several insurers offer products to fill coverage gaps for ride-share drivers. Premiums, type of coverage, limits and availability varies by state. Insurance providers can answer specific questions about what is and is not covered.
  • Research before riding. Before accepting a shared ride, know the extent of protection in the event of an accident. Most ride-sharing companies have liability policies to cover any passenger injuries. If injured while riding, report a claim with the driver's insurer and the ride-sharing company's insurer and let them sort it out. 

Goods & Services for Hire

  • Require a security deposit. When lending goods such as high-fashion clothing or a bicycle, get a security deposit to cover any losses. Capture photos and other information in a home inventory
  • Make sure it works. Consumers can be held liable for renting out items that are known to not work properly. A homeowners policy may not cover the transaction because payment was exchanged for rented goods.
  • Know who's paying. Hiring a stranger to help with home cleaning, moving or other tasks through sites such as TaskRabbit? Find out whose insurance covers what. The service may offer a guarantee, but often it is secondary to any insurance or policies the consumer already has in place.

The department also produced a video with tips for individuals participating in the home sharing economy. 

Missourians with insurance questions or complaints are encouraged to contact the Missouri Department of Insurance by visiting insurance.mo.gov or by calling 800-726-7390.

For more tips and information to help consumers and small business owners be smart and safe when sharing, visit InsureUonline.org.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

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