Okay. You have heard about the sharing economy and you want a piece of the action. Maybe you think you can rent the kids’ bedrooms now that they’re off at college. Or perhaps you think you could pump up the tires on your old Dodge Dart and make some cash driving other people around. What could possibly go wrong?
Actually? Lots of things. Another driver runs a red light and crashes into you, seriously injuring your passenger. The neighbor who rented your ladder falls and hurts himself. The person renting that room in your house falls asleep falls down the stairs and breaks a leg. Think you can just call your insurance company and they will take care of everything?
Think again. Have you ever read your entire insurance policy? Of course not. No one has. We assume a lot to things are covered that aren’t. Before you jump into the sharing economy with both feet, you would be wise to have a talk with your insurance agent to find out what your particular policy covers. And what it doesn’t.
The Vermont Department of Financial Regulation has issued an alert warning people about the potential dangers. It says, “While joining this ‘collaborative consumption’ revolution may sound like an easy way to make extra money from renting your home, car or other personal possessions, it is important to fully understand the insurance implications and liability considerations of such transactions for all participants.” That may be the best advice anyone has ever given you.
Many of the major transportation companies like Uber, Lyft and Sidecar have umbrella policies that cover their business operations. But let’s be very clear. Those policies are in place to protect them, not you. If there is a claim, their lawyers will protect their interests, but who will protect yours? Will their insurance pay to repair your car if it is damaged if your insurance does not?
If you are injured in a car you hired over the internet, who will pay your medical bills and compensate you for time out of work? Does your homeowners insurance cover you if a guest is hurt in your house? If you are the injured guest, how do you begin making a claim?
These are questions you need to ask yourself first, before you get involved. If you don’t know the answers, you may may end up needing a lawyer to represent you. Most people have never hired an attorney and have no idea how much it costs to get legal representation. But the answer usually is, a lot.
Here’s what Vermont officials recommend before getting involved in the sharing economy:
• For insurance purposes, once you begin earning income from renting out personal property, you may be considered a home-based business. Make sure you understand all relevant legal and regulatory requirements.
• Before sharing a vehicle or residence, make sure auto and homeowners’ insurance policies provide the protection you need.
• When lending goods and services, be sure to set a security deposit that is sufficient to cover losses. Take photos and other information about your property in a home inventory. Be mindful that for some items, you may not be able to locate an exact replacement.
The sharing economy will absolutely revolutionize how business gets done in the future. But it will take the legal system years if not decades to catch up with the changes taking place. In the meantime, there is a significant danger that some people looking to make some fast cash are going to wind up paying huge legal bills instead.
Don’t let that happen to you. Follow the simple and sensible advice from Vermont’s officials. Consult with your insurance agent. And as always, make sure you get it in writing. An ounce of prevention is worth a pound of cure, my grandmother would say. That was good advice 50 years ago and it is still good advice today.
Source: Vermont Digger