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The Comprehensive Guide to Car Sharing and Your Insurance PolicyJune 30th, 2023

Ride-sharing has become an affordable, convenient, hassle-free, and environmentally-friendly transportation strategy in Ontario. However, these new ways of getting around do have an impact on insurance coverage. 

Do you get separate car-sharing coverage or use traditional auto insurance? Before you embark on car-sharing as a service provider, you must understand how it implicates your auto insurance.

What Is a Car-Sharing Service and How Does It Work?

A car-sharing service is a peer-to-peer car rental service that allows people to rent their cars to others who need them. The beauty of it, it eliminates the long-term commitment and expenses of owning a car. 

The service usually has a fleet of vehicles available at different locations in your city or neighborhood. 

The process is simple:

  1. Sign up for a car-sharing service via an app or website.
  2. Use the car-sharing app to find a car that is available nearby.
  3. Unlock the car with a smartphone.
  4. Run errands, appointments, or take trips using the vehicle for as long as needed.
  5. Return and park the car at the same designated parking spot. 

You typically pay by the hour or by the day for car-sharing services. The total cost will depend on the car of choice, the rental duration, and the car-sharing service used.

How Car Sharing Affects Your Insurance Policy

While car sharing service offers several advantages, it has various implications on traditional car insurance that every service provider must understand. 

The top impacts include:

Gaps in Coverage

Traditional auto insurance policies may not cover car-sharing activities, creating gaps in insurance coverage. 

These gaps leave you and other participants exposed to potential risks. You could be liable for any damages caused, even if you are not at fault. 

Increased Exposure to Additional Risks

Several people are usually involved in driving your car. You’re entrusting your vehicle to strangers, increasing exposure to additional risks. 

Car-sharing apps and websites have thorough driver screening procedures. Nevertheless, the other drivers’ behavior and driving habits may increase the likelihood of accidents or damages. 

Increased Insurance Rates

Insurance companies generally perceive car sharing as a higher-risk activity than owning a car. The increased exposure to potential accidents, damages, and liability claims can result in higher insurance rates. 

You may experience premium adjustments to reflect these increased vehicle-sharing risks.

The Need for Additional Coverage

The gaps in coverage mean seeking additional insurance designed for car-sharing activities. While these specialized coverage options can help fill the voids in traditional policies, they automatically translate to added premiums to cover the difference.

Coverage Changes or Endorsements

Car sharing is complex, and depending on your insurance provider, you may need to change or add endorsements to your existing policy or get a new one altogether. These modifications are necessary to address the unique risks of sharing your vehicle. More endorsements also mean increased insurance costs. 

Mileage Considerations

Frequent car rentals typically increase your car’s mileage. Some insurers may consider annual mileage when calculating premiums, which means higher premiums if your car’s mileage has surpassed a certain threshold. 

Increased Security Measures

You might install additional security features in your car, such as GPS tracking devices, immobilizers, security cameras, and keyless entry systems. These measures reduce the risk of theft, vandalism, or misuse and, in turn, reduce your insurance rates.

Stricter Regulatory Compliance

Car-sharing services may have specific laws related to licensing, insurance, safety, and any local or regional regulations imposed on car-sharing activities. They can influence minimum insurance requirements, clear insurance disclosure and verification, and enhance compliance monitoring. 

Additional Insurance Endorsements for Car-Sharing Services

Besides traditional auto insurance, you might require the following coverage to protect yourself and your car adequately:

  • Liability insurance: to protect you and the car-sharing platform in case of accidents or incidents during the rental period.
  • Physical damage insurance: for repairs or replacements for your vehicle in case of accidents, theft, or vandalism. 
  • Uninsured/underinsured motorist coverage: compensates for injuries and damages if a user is involved in an accident with a driver with insufficient or no insurance coverage.
  • Medical payments coverage/personal injury protection: medical expense coverage for injuries sustained during the rental period.
  • Cyber insurance: to protect against potential data breaches, cyberattacks, or unauthorized access to user information.

These additional coverage endorsements may vary depending on various factors, such as your location, vehicle, and car-sharing service you use. Consult with an insurance broker for expert guidance. 

Benefits of Using a Car-Sharing Service

Car-sharing service is an attractive transportation option for many people due to the following benefits:

  • You save money on the expenses of owning a car, such as purchasing a vehicle, insurance, maintenance, fuel, and parking fees. 
  • Flexible and convenient transportation.
  • It enhances environmental protection by reducing the number of vehicles on the road, traffic congestion, carbon emissions, and pollution.
  • You get to support local ventures.
  • Eases stressful, long-term financial obligations.
  • It provides access to a vast pool of vehicles.
  • Easy to use. You simply sign up online or through an app, and start using the service immediately.
  • Helps promote a sense of community.
  • You can test drive different car models and gain first-hand experience before deciding on a potential purchase. 

Car-sharing services are a great alternative to traditional car ownership, especially if you value affordability, convenience, and environmental sustainability.

Top Car-sharing Services in Ontario

If you decide to venture into car-sharing service in Ontario, you can join any of the following platforms:

Each of these platforms is unique, especially with insurance requirements. In addition to carefully reading their terms and conditions, consult with a professional insurance broker for guidance and accurate interpretation.

Ensuring Peace of Mind with Duliban

Car-sharing offers immense benefits of convenient, affordable, and environmentally friendly transportation while eliminating the burden of owning a vehicle. Nevertheless, you must understand car insurance implications if you’re considering car-sharing or are already there. 

Further, it’s crucial to prioritize adequate car-sharing coverage to protect yourself and your venture from potential risks and liabilities. 

To help you navigate the complexities of car-sharing insurance, Duliban Insurance Brokers have your back. Request a quote and take a proactive approach to safeguard your investment. 


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