So you want to rent your car out? It's parked up for most of the day - sometimes for days on end - why not put it to work? After all, what could go wrong?
Perhaps you're saving to buy a home, paying off a student loan or want to get your car paid off faster. Renting your car out on occasion may be a good strategy to earn some extra cash.
It's no wonder then, that peer-to-peer rental companies are flourishing around the world. In New Zealand we have YourDrive, while elsewhere there are examples like Turo and easyCar Club - dubbed the easy way to hire. But it's not all plain motoring. A couple of years ago a peer-to-peer car rental company in the US, called RelayRides, made an out-of-court settlement with four of the passengers injured in an accident (the driver died). The advice to Americans following the case? Check your insurance policies.
AMP's Head of General Insurance, Rob Dibley, says that insurance for car hire companies - even for the big professional players like Hertz and Avis - can be so expensive that many choose to self-insure.
"Renting your car out for the day or a few days’ sounds like an easy way to make money. But the insurance costs may mean it just isn't viable. If you haven't changed your insurance cover from personal to commercial cover, your insurance policy might not even be valid," he said.
If you decide you want to go ahead and plunge into the sharing economy by offering your vehicle for the occasional rental, there are some things you should be aware of:
1. Take advice on health and safety laws
As a person in business or conducting an undertaking (which you potentially become even if you're hiring your car out occasionally), you’re going to have certain obligations and responsibilities under New Zealand's strict new health and safety legislation.
"You have a primary duty of care to ensure the health and safety of your customers. Make sure your vehicle is fit for purpose and remember that a current WOF is not an endorsement of how safe your car is. Do a proper safety check to cover off all your bases," he said.
2. New Zealand law changes could hurt your back pocket
Mr Dibley pointed out that changes to New Zealand law mean that you could get sued for pain and suffering over and above what ACC pays out to the claimant.
You could also be at risk of being sued for any actual losses in excess of the compensation received from ACC that ACC does not pay out to claimants because the state insurer only pays up to a maximum of 80% of a person's income (capped at a certain amount) for as long as they are unable to work as a result of an accident.
"Consulting with an insurance professional is important. I believe that public liability/statutory/carriers liability are potentially necessary," Mr Dibley said.
3. Check your insurance
The insurance cover provided to you by the sharing economy enterprises in which you're participating may not be sufficient, or may be designed to look primarily after the interests of the entity.
"There may be a challenging claims process involved or high excess payments. Make sure you do your homework and talk to your insurance Adviser about how this will impact your personal insurances - even third party," Mr Dibley said.
Anybody participating in the sharing economy should always disclose to their insurer. Most insurers will insure under differing terms and conditions. If you have any questions, please get in touch - we're happy to help.