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Share with care: Know the risks before you share a home, ride or more
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The sharing economy is rapidly gaining popularity. Within the next eight years projections show that sharing rides, homes and equipment will be a $335 billion global industry.
But before you jump in on peer-to-peer transactions, understand how they work and how to avoid financial pitfalls, according to Ken Selzer, CPA, Kansas Commissioner of Insurance.
“Knowing the insurance considerations involved in sharing economy transactions is especially important as these business and personal ventures move forward,” Commissioner Selzer said. “Sorting out the main points now can save you possible frustration later.”
The following tips may help consumers and entrepreneurs in their sharing activities.
Don’t be taken for a ride
Ridesharing companies such as Uber and Lyft connect individual drivers with people who need rides. Passengers and drivers can screen each other, schedule rides and collect payment electronically.
Consider these tips to stay safe on the roads while using a ridesharing service:
• Before contracting as an Uber or Lyft driver, know if your personal auto insurance policy typically excludes coverage for business use or when drivers are “available for hire.”
• Several insurers offer products to fill coverage gaps for ride-share drivers. Premiums, type of coverage, limits and availability vary by state. Ask your insurance agent to find out what is and is not covered.
• Before accepting a shared ride, know the extent that you are protected in the event of an accident. Most ridesharing companies have liability policies to cover any passenger injuries. If you are injured while riding, report a claim with the driver’s insurer and the ride-sharing company’s insurer.
Home is where the “smart” is
Home-sharing or peer-to-peer rentals offer people the opportunity to rent out rooms or entire homes to guests for extra income. Guests find a property online and pay for the stay like a hotel. The difference is that the property is often a privately-owned apartment, condo or house, and anyone can register as a host or guest.
The following facts will improve your home-sharing smarts:
• If you regularly rent out rooms for a profit, that venture could be considered a home-based business. Because some homeowners policies won’t cover property damage caused by or injuries to a paying guest, talk to the home-sharing service and your own insurance agent to determine if additional liability coverage or special landlord insurance is needed.
• If you plan to stay in accommodations secured through a service such as Airbnb or VRBO, confirm that your own homeowners, renters or personal liability insurance policies offer protection for potential damages to the rental property. If not, make adjustments as needed. • Home-sharing user agreements change often. Read the fine print every time you book a stay.
Personally speaking...
A smaller segment of the sharing economy involves the lending of personal items for a fee. Lenders and borrows advertise and rent items like power tools, golf clubs or designer dresses online. This also occurs when someone seeks help online from another individual to help with tasks like packing boxes or housecleaning.
Check out the following tips to help protect yourself and your items:
• When lending goods such as a designer dress or bicycle, get a security deposit to help cover any losses. Capture photos and other information in your own home inventory.
• You could be liable for renting out items that you know don’t work properly. Your homeowners policy may not cover the transaction because you were paid in exchange for the rented goods.
• If you hire a stranger to help with home cleaning, moving or other tasks through sites such as TaskRabbit, find out the insurance coverage. The service may offer a guarantee, but often it is secondary to any insurance or policies you may already have in place.
“Life can be more connected when working within the sharing economy, but you need to prepare yourself first so you are not surprised later,” Commissioner Selzer said.