North Carolina car owners should be aware that sharing their cars with strangers comes with an unseen liability. When the renters of their vehicles get into car accidents, the question of who is liable for the damages may come up. If the drivers don't have enough insurance to adequately cover the cost of any restitution awarded, then the owners of the vehicles could find themselves paying out of their own pockets to make up for the rest.
Car sharing is a practice that is becoming ever more popular. Car owners can earn a little extra cash by leasing on their vehicles. However, in many cases, the only insurance offered to renters of cars is the minimum liability coverage required by state law. That amount likely won't be enough to cover the costs of any fatal accident claims since many liability policies only approximately $20,000 worth of bodily injury and $10,000 worth of property damage.
Currently, only three states have revised their auto insurance laws for peer-to-peer sharing services so specify exactly where the renter's auto insurance policy ends and the car owner's begins. There have been issues with some peer-sharing companies not offering appropriate insurance. For instance, in 2013, RelayRides was forced to suspend its operations in New York after the state Department of Financial Services ordered it to do so for alleged violations of insurance law. Industry official warned people that renting their vehicles out through such services could leave them liable in the event of accidents. They also stated that at the least car owners should have commercial auto insurance policies that fully protect them before they rent out their vehicles.
If someone is injured in a car accident involving a rental car, it may be difficult to determine who is liable for the injuries. In previous personal injury suits, the injured party named not only the driver in the suit, but also the company that rented the car and the car's owner as a defendant.
Source: Forbes, "Beware The Liability Of Sharing Your Car With Strangers", M.P. McQueen, October 15, 2013