What do you do when an auto subrogation claim involves a vehicle rented on a personal vehicle sharing platform? In the following episode of On Subrogation: Personal Vehicle Sharing, insurance lawyer and Rathbone Group Partner Jason Sullivan discusses what’s different about this new type of rental car subrogation.
Most are familiar with rideshare services like Uber and Lyft, but personal vehicle sharing platforms have also recently come to prominence – enough so, at least to affect the insurance industry and state legislation. Personal vehicle sharing is basically Airbnb for motor vehicles; drivers allow others to rent their car while they are not using it.
This is different than traditional rental car subrogation because a private individual is directly entrusting another private individual with their vehicle. Those people are strangers, and they never interact. And while private vehicle sharing is undoubtedly useful – a convenient source of passive income that’s also environmentally friendly – it poses challenges for subrogation lawyers managing these types of claims.
Who is Liable in a Personal Vehicle Sharing Auto Claim?
Where does a carrier look for recovery in these types of cases? Suppose your insured is struck by another driver. During the insurance claim investigation, you find out the other driver was at the time renting the car from one of these platform services; they do not own the car.
The Driver?
The first place to look for subrogation recovery is the driver of the vehicle. Many personal auto insurance policies will cover another vehicle. However, if the other driver solely relies on personal vehicle sharing for transportation and does not own a car, they may not carry an auto insurance policy. In that case, a subrogating carrier would have to look to personal assets, and that is neither simple nor efficient.
The Owner?
The second recovery source to consider is the owner of the vehicle. If the owner does not carry a commercial policy or one with explicit language including business activity in the coverage, a personal auto policy is not likely to respond to a claim from an incident where the car was being rented out. A subrogation attorney might consider seeking recovery via negligent entrustment, but that is also difficult because the owners and drivers never personally interact.
Or Maybe The Platform?
These gaps in coverage or mandates regarding the use of personal vehicle sharing platforms have led some states to address these issues as a public safety matter. California was the first; in 2011, it enacted statutes clearly defining the obligations of the vehicle sharing platforms. A California subrogation attorney can now look directly to the platform for claims recovery because they are required to provide liability insurance at three times the state minimum. Colorado has enacted similar mandates.
The National Council of Insurance Legislators has also created model legislation for personal vehicle sharing programs that many other states have adopted. These generally require the personal vehicle sharing platform to provide liability coverage at the state minimum. As more states enact similar statutes and the industry becomes more regulated, subrogation law firms will have to keep up with differences in how states enact this legislation.
For more informational articles, videos, and podcasts on subrogation claims, strategy, and more, visit our blog, YouTube channel, or podcast library. Have a question or topic we haven’t yet covered? Reach out at blog@rathbonegroup.com to see your question answered in a future episode of On Subrogation.