MA Warns Ride-Sharing, Car-Sharing Drivers of Insurance Risks

Changes in the transportation sector are happening pretty fast these days, spurred by the wide availability of smartphones and richly funded startups with a new take on old-school taxi and car rental services.

That’s meant clashes with local regulators, established competitors, and even the startups’ own drivers. And lately, a seemingly dry topic has become big news: insurance.

On Thursday, Massachusetts officials joined a chorus of state regulators who have warned residents that their insurance policies might not apply if a private car is being used to make a few bucks.

That could cover driving other people around town for a fee, as with services like UberX or Lyft. It also could apply to people renting their wheels out to strangers, which is possible through startups like FlightCar and RelayRides.

“What could go wrong? Actually, a lot!” the state consumer alert says. Sixteen other states and the District of Columbia have issued similar warnings, according to the Taxi, Limousine, and Paratransit Association, a frequent critic of Uber and Lyft, the two most prominent companies offering so-called “ride-sharing” services.

At issue is the fact that personal insurance policies may not provide adequate coverage for damages or injuries that happen while a driver is using a personal car in a commercial setting. The issue has garnered more intense interest from lawmakers in California after a 6-year-old girl was hit and killed by an Uber driver who was waiting for fares.

Uber and Lyft have fairly comparable insurance policies detailed on their websites. RelayRides and FlightCar, which allow people to rent their cars to other consumers, also make a point of advertising insurance policies on their websites.

In its warning, the Massachusetts Division of Insurance says drivers and car owners should be aware of possible gaps in any coverage provided by the companies, along with possible consequences if they get in an accident.

“All insurers in Massachusetts will deny coverage should an incident occur if you use your vehicle to provide rides to strangers for a fee or other economic inducement. Most insurers in Massachusetts will also exclude coverage when you ‘rent’ your car to another driver through a car-sharing service,” the warning says.

In addition, insurance companies might refuse to continue covering a driver after any crash that comes during a commercial use of a private car, even if that scenario isn’t explicitly prohibited, the state said.

Here’s the full alert, which Massachusetts officials sent out after we asked about any ride-sharing concerns like those highlighted in other states:

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