Will My Oregon Insurance Company Let Me Lend My Auto for Profit?
In most cases, people get their cars insured specifically for personal use—driving to the grocery store, taking road trips, getting to school, etc. For the minority of people who insure cars for commercial purposes—delivering goods, providing a means of transportation for compensation, etc.—insurers tend to apply different rates and coverage structures. So when a car insured through a personal policy is damaged while being used for purposes of making money, it’s likely that the insurer will not cover the repairs for those damages.
So, normally, coverage would be voided when a personally insured car is being lent to others for money. But a new law passed by Oregon representatives in June 2011 paves the way for residents to maintain personal auto coverage while still being able to rent their cars out.
Policyholders Need to Use a Sharing Service to Maintain Protection
While the new Oregon auto insurance law allows policyholders to rent out personally insured cars for money, it does not allow residents to do so independently. They must use a “peer-to-peer” sharing service that separately provides protection that either matches or exceeds the protection already provided through the owner’s own policy.
Under this setup, the shared car is insured by both the vehicle owner and the third-party sharing service. When it is being driven by the owner or people the owner lends the vehicle to for free, damages would be covered by the owner’s personal policy. When it is being driven by strangers who have rented it through the service, it would be covered through the service provider’s company.
Sharing Services Required to Provide Extra Protection
The authors of the legislation put in safeguards to ensure the amount of insurance a car owner purchases for a vehicle is not degraded once a renter gets behind the wheel.
By law, the types and levels of protection provided through the sharing services must at least match that of the owner’s policy. It must also include comprehensive and collision insurance, regardless of whether the owner has it separately. In addition, the liability coverage provided through the service must be at least $150,000 for bodily injury damages per accident and at least $60,000 for property damages per accident—that’s three times the minimum amounts required by the state for regular drivers.
Renters Cannot Use the Car for Commercial Purposes
There is one small catch to the protection provided by the sharing services: The renters cannot knowingly be allowed to rent the vehicle for commercial use.
Oregon law actually defines commercial use as use of a vehicle for the transportation of people for compensation or a profit or use of a vehicle primarily for the transportation of property.
The law should apply to policies renewed or issued after January 2012, but motorists are still advised to consult with their car insurance companies before renting out an insured vehicle to ensure that protection is maintained.