For Consumers

Sharing economy

What is the sharing economy?

People are using things they own, including cars and homes, to make money. According to Forbes, one quarter of the U.S. population participates in some form of economic sharing.

Examples of sharing economy companies:

  • Ridesharing:  Uber, Lyft and Sidecar.
  • Peer-to-peer rentals: Airbnb, HomeAway, Turo.
  • Goods and services: DogVacay, a pet-sitting service, and NeighborGoods, which allows you to share items with your neighbors and friends.  
  • Delivery services: Roadie, which allows you to ship goods with people who are already making a trip, and Favor, a delivery service. 

What are insurance considerations for people who participate in the sharing economy?

At this time, most personal auto and homeowner insurance policies sold in Washington state don’t cover losses that occur during shared economy activities. In fact, many policies have specific language that states they won’t cover such losses.

Some sharing companies offer insurance to entrepreneurs. Those policies cover liability in the event someone is injured or property is damaged during the transaction. However, most insurers require sharing entrepreneurs to have a commercial policy to cover their property and liability.

Before you join a sharing business model, talk to your agent or broker to make sure your auto and homeowner insurance policies provide the protection you need. If not, you may need to buy a separate business policy to cover your property and liability while operating as an entrepreneur.

In 2015, the Washington state Legislature created a law to regulate ridesharing in our state (leg.wa.gov).

Tips for consumers:

  • Ask if the sharing company will pay for your expenses if you are injured.
  • Before you participate in a sharing transaction, talk to your insurance agent or broker to discuss your options in the event that you experience a loss or injury.
  • Be aware that it’s highly unlikely that personal insurance will cover any losses.

Bottom line: If you rent out your house, a room in your house, your car or rides in your car, there’s a good chance your personal insurance policy won’t cover any damage or injuries.