Some have claimed that the way of the future will involve a “sharing economy” where everything from cars and bicycles, to homes and jets will involve people cost sharing or renting their property out to people. If you live in a large city then most likely you have heard of Uber, Lyft, and Airbnb, who represent some of the largest and well-known TNCs (Transportation Network Company) that operate on a global scale. The benefits to these models favor both the business and consumer; but what about the driver or host?
Currently the business model is very profitable for the business’ themselves, as they have very low risk and cost. They typically do not own the property that is being “shared”; instead this is the responsibility of the contracted driver or host who gives rides in their vehicle or rents out their property. For consumers this is a great benefit as it gives them more choices, enhances the consumer experience, and potentially could lower the cost of rides or lodging via increased competition.
The issues that many contracted employees run into (and may not even be aware of) are the gaps in insurance coverage. Insurance agencies have stated that most standard driver or homeowner policies do not include language related to business, and that instead a policy that covers a personal business in the home or car would be needed. To simplify this, if someone were to be injured on your property or in your car during a stay or ride, your insurance may not cover any claims.
Local, state, and even federal regulators and lawmakers have used these coverage gaps in some efforts to demand more regulation in the TNC industry. Not only have they used a lack of insurance to demand changes, but for some areas the issue of zoned locations, and licensing have also come into play, as cities may have zoning or licensing requirements for hotels and taxi services.
Fortunately the P&C Insurance industry is responding with additional products designed to fill in coverage gaps aimed at those who are interested in being an Uber Driver or Airbnb provider. Recently in California, Kansas, and Massachusetts, MetLife Auto & Home, Farmers Insurance, and USAA have unveiled specialty insurance products that cover ride-sharing drivers in their respective states. Even Airbnb has upgraded an existing liability insurance product to a primary coverage product, which will be available to over 1 million hosts in 16 countries, filling in any homeowner policy gaps. Across the country insurance agencies are looking for ways to create a product that satisfies this new sharing business model.
While increased product offerings may not solve all the demands of regulators and lawmakers, it should allow drivers and hosts to operate knowing their property has the right amount of coverage.
For more information about TNCs and Insurance, check out Insurance Information Institute’s Q&A.