When Car Accidents Happen in Rented Vehicles

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Owning a car used to be part of the bedrock of adulthood in the U.S.

Today, the number of people who own cars is declining. There are many reasons for the change—among them, the reality that ride-hailing and car-sharing services are becoming ubiquitous in many places nationwide.

And for a lot of people, you don’t need to own a vehicle in order to get easy, reliable transportation where you need to go. In some cities, ride-share services like Lyft or Uber are less expensive and more time-efficient than locating and paying for parking.

Also, some people simply don’t want to drive themselves — either because they want to drink without worrying about a DWI, or because technology increasingly allows for valuable work time when you’re in the car if you’re not the person driving.

Finally, cars can be expensive. Maintenance and storage cost money, and there’s fuel and environmental consciousness, too.

Ridesharing and carsharing as transportation alternatives

Nowadays, there are several ways to get car transportation without owning a car.

You’ve probably heard of popular companies like Uber and Lyft, but they’re not the only ride-sharing companies. Curb, Wingz, Via, Scoop, Arro, and others are variations on the rideshare model that offers a passenger the opportunity to schedule a ride driven by someone else, sometimes carpool-style, in the driver’s personal vehicle.

And then there is the “car share” model.

These services allow you to “borrow” a car that you drive and then return it to a prearranged location. It’s a little different than a typical car rental, though. The benefit of using car-sharing services like Zipcar or Turo is that a car can be located in a spot near you, without having to seek out a car rental office.

A Zipcar can be rented by the day or by the hour, and the app locks and unlocks the vehicle. Zipcar owns its own fleet of vehicles and, like a car rental, you can choose a range of economy cars to vans or SUVs.

By contrast, Turo is sort of a hybrid between Uber and Zipcar. The Turo app allows a person to rent out their privately owned vehicle through the app. The vehicle owner can make money by renting out their car, and a driver can book a car nearby and cost-effectively that they drive and return. Turo is more commonly compared to the AirBnB business model... but instead of offering your house to a renter through a 3rd party app, you can offer your car.

While there are many benefits to both ridesharing and car-sharing—namely that you don’t need the expense and responsibility of owning a car in order to get where you need to go—it also raises interesting questions and issues when it comes to who is liable for damages in the event of a car accident.

Liability for a rideshare or car-share accident

“Liability” is the legal term for who’s at fault for an accident.

In personal injury law, the courts determine if the liable party negligently caused the injury.

There are 5 elements that are universally necessary to prove negligence:

  1. The defendant had a duty to either act or not act in a specific way,
  2. The defendant breached their duty,
  3. Breach of that duty was the cause of the plaintiff’s injury,
  4. The defendant should have foreseen the likelihood that someone would be harmed by their action or inaction, and
  5. The injury resulted in actual damages (cost of medical treatment, lost wages, pain and suffering, etc.).

However, each state has its own negligence standard that establishes how damages can be awarded based on whether or not the plaintiff (the injured person) had any liability for their own injuries.

Potential defendants in a carsharing accident

The defendant is the person or company who is liable for the accident — and sometimes there are multiple defendants.

The most likely defendants in a ride-share or car-share accident could be:

  • The driver who caused the accident (regardless of whether they are driving a ride-share vehicle, their personal vehicle, an employer-owned vehicle or a rented vehicle)
  • The owner of the vehicle (if the accident was caused by an issue with the vehicle that could have been avoided through regular maintenance)
  • The company that maintains the vehicle (for instance, Zipcar)

Insurance for a car-share vehicle accident

There are 4 types of auto insurance fault systems:

  • No-fault. In a pure no-fault system, the insurance company pays for its own insured’s minor injuries, regardless of who was at fault for an accident. In some states, this includes medical costs, lost wages, and other out-of-pocket expenses resulting from an accident. In a no-fault state, the insurance company pays the driver’s own benefits but there are restrictions on whether you can file a lawsuit.
  • Choice no-fault. In a state that allows choice no-fault, a driver can choose a no-fault insurance policy or a regular insurance policy.
  • Tort liability. This is “traditional” insurance. The driver who caused the accident is responsible for paying the costs to the other drivers. If the insurance companies can’t reach an agreement, the injured drivers may file a lawsuit against the liable driver.
  • Add-on. A state that allows add-ons permits a driver to receive compensation from their own insurance company (just like a no-fault state), but there’s no restriction on lawsuits.
Enjuris tip:Personal Injury Protection (PIP) usually covers a driver and their passengers, but not if they are transporting passengers for income. Some companies — like Uber and Lyft — offer supplemental protection.

Let’s take a look at a few scenarios:

Driver A is driving her personal vehicle. She causes an accident with Driver B, who is an Uber driver with a passenger in the car. If it’s an at-fault state, Driver A is responsible for injuries to Driver B and their passenger.

 

If it’s a no-fault state, Driver A’s insurance would cover her own injuries. Driver B’s insurance would cover their injuries — and those of their passenger — potentially with supplemental coverage from their Uber insurance. 

Driver C rented a car from Driver D through the Turo app. Driver C causes an accident with Driver E. The owner of the Turo car would be responsible for all injuries in an at-fault state.
Driver F is driving a car rented through the Turo app. The car’s brakes fail and there’s an accident that involves both Driver F and Driver G.  The owner of the Turo car is likely responsible if they failed to ensure the proper maintenance on the vehicle.

Vehicle ownership matters for a few reasons. Insurance usually follows the vehicle. In other words, the owner’s auto insurance policy should cover the damage costs, regardless of who was driving (provided the driver had permission to do so).

However, it’s always important to check your own policy (or the one you might purchase) to make sure this is true. Although insurance companies have specific laws and it’s a highly regulated industry, there is room for variation among policies and they are not all the same.

Some insurance policies cover people other than the policyholder as long as they are a member of the policyholder’s household. The insurer might limit coverage to licensed drivers within the same state. There are variations and exceptions, so before anyone else drives your car, you should know what your liability is for the person, the vehicle, and any other person who could be affected by their driving.

I have auto insurance. Is that enough if I rent out my car through a car sharing app?

Most standard insurance policies for personal vehicle use do not cover accidents that happen when you’re using your car (or renting your car) for income. If you’re intending to use your car for a service like Uber or Lyft, or to rent it out like Turo, you need to check with your insurance company first.

You can usually get a rider (add-on) to your policy that covers your car when it’s being used for commercial purposes. If not, you might have to get a different policy that includes commercial use.

Some companies like Uber and Lyft do offer insurance, but they often try to shift the blame or deflect liability onto the driver so that their insurance doesn’t have to cover the damages.

Enjuris tip:Turo, which functions like an Airbnb for cars, provides some insurance coverage for owners and drivers. The owner has insurance for the actual cash value of the vehicle for collision and most comprehensive causes. Turo also provides $1,000,000 in liability coverage for the owner. A driver who rents a Turo car may accept or decline additional insurance coverage, just like when you rent a car from a traditional rental company.

What to do after a car-sharing accident

1. Check on each person’s condition.

In the immediate aftermath of a crash or collision, the first priority is to see if anyone requires emergency medical assistance. If anyone is injured, call 911 for help.

Regardless of whether you think you’re injured or not, you should seek a medical evaluation after the accident. Some injuries don’t appear until days or weeks later. If you don’t have your post-accident condition documented by a physician, it will be difficult or impossible to prove that it was related to the accident.

2. Notify law enforcement.

Make sure to call the police so that they can file an official accident report, see if anyone needs help and gather important information from all drivers involved.

3. Obtain information.

Just like after an accident, you need to collect the name and contact information — along with insurance information — for each involved party. Also, write down the license plate numbers of each involved vehicle and gather as much evidence as possible from the crash scene.

4. Notify your insurance company.

Report the accident to your own insurance company as soon as possible, but don’t file a claim yet (more on that in the next step) and don’t agree to give a recorded statement just yet.

5. Call a lawyer before filing an insurance claim.

There are 2 relevant points, here:

While you should make a report to your own insurance company that the accident happened immediately, do not file a claim yet. A report is different from a claim. Some insurance companies will deny a claim if the accident isn’t reported right away. However, don’t admit liability to your insurance adjuster. Only share the facts (names and contact information for involved people, intersection or location where the accident happened, etc.) and don’t get into who was or was not liable.

Second, these types of accidents could have more nuances (and more involved parties) than a typical car accident between 2 drivers. There could be insurance implications that are beyond the typical liability issues, and a personal injury lawyer is the best person to work that out.

Your lawyer can help minimize your percentage of liability and maximize what you can receive in damages. Your lawyer can also communicate with the insurance company on your behalf so you don’t accidentally say something that is detrimental to your claim.

Need legal advice?

You can use the Enjuris directory to find a lawyer who knows the laws and insurance regulations for your state, and who can work with you to secure the best possible outcome.

 

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