Zipcar has been growing
by leaps and bounds the last few years as more and more people have discovered
the ease of a car sharing service. While using a car sharing service is
convenient, are you covered if you get in an accident? In a serious accident
you could be on the hook for thousands of dollars in damage.
These services cater
to people, usually urban dwellers in good-sized cities, who only need a car
once in awhile for a few hours at a time and are not driving far. The cars are
normally parked in neighborhoods and can be booked online or by smartphone app.
The cars are rented by the hour, the mileage is limited and the price includes fuel
A traditional rental on the other hand allows you to drive
the car the entire time you rent it, and the mileage is unlimited. However they do require you to cover the cost
of fuel and insurance on your own. If you don’t already own a car and have an
insurance policy you will be required to purchase liability from the rental
agency. Collision coverage is an option, one you should consider, as you will
be on the hook for repair costs to the rental if you are in an accident.
The difference between a traditional rental and a car
sharing service can be huge from an insurance standpoint.
What You Need to Know
About Insurance for Rentals
Traditional rental cars – Rental companies charge anywhere from
$14 to $25 a day for coverage. This can really add up if you are renting the
car for a week. In addition, you will need to cover the cost of your medical
care if you don’t have health insurance. If you already own a car, your policy should
extend to any traditional rental. Check your policy before you head out on the
road to make sure you are covered.
While many credit cards offer coverage, the policy is limited
to collision which will cover the cost of the damaged vehicle but offers no
liability coverage or medical costs.
Zipcar – This car sharing service offers insurance to its
members with each rental, but according to numerous news outlets, including the
York Times in a catastrophic accident, the coverage will almost certainly
not be enough, which could end up costing you big.
Zipcar offers a combined single limit policy of $300,000 per
accident for any driver that is 21 or older. This liability coverage covers the
costs of property damage as well as bodily injuries if the Zipcar driver is
found at fault. The coverage drops to state required minimum levels for any
driver under the age of 21. In most states the minimums are woefully inadequate
even in a minor accident.
Personal injury protection (PIP) coverage, which covers the
medical costs for the driver, is included but only at state statutory limits.
The car itself is completely covered by a comprehensive collision policy, as
long as the Zipcar member is driving so don’t let your friends get behind the
Unfortunately, above these limits a Zipcar driver will
personally be on the hook for the costs, which can be substantial, depending on
the accident. Liability costs can easily run into the millions of dollars when
a serious accident occurs.
In addition to limited coverage, Zipcar members are
responsible for a $750 fee (it’s a bit like a deductible) for the following:
- Third party claims
- Vehicle damage for things such as scratches,
flat tires, a drained battery, cracked windshields and any damage from
vandalism or theft.
- Damaged caused by acts of god like wind, flood
and hail while you are using the car.
If the Zipcar member is over 21 and has not had an accident
for at least the past 12 months they can buy a damage fee waiver which
eliminates the damage fee. If the other driver is fully covered and found to be
completely at fault you will not have to pay the damage fee.
The Zipcar agreement also spells out prohibited uses which
will void your insurance coverage. Texting, emailing or using a cell phone are
just a few activities that will put you on the hook for accident damages.
While Zipcar and other car sharing companies provide a much
needed service you should be aware of the limitations in their insurance
coverage. One catastrophic accident can put you on the way to the poorhouse.