Are you considering signing up as a ride share driver or renting out a room in your house? You probably know someone who’s already doing this, and it might sound tempting. It can be a nice way to generate some extra income, save more for retirement or other goals, and maybe to even meet interesting people. For these and other reasons, “sharing economy” activities are growing at a rapid pace.
However, before you take the plunge, make sure that you are not putting yourself at risk financially. One might assume, incorrectly, that your auto insurance policy would cover an accident that happens while you are “Lyfting” someone home from a concert. However, most insurers now exclude coverage for damages and injury occurring while you are driving for Uber or Lyft. The ride-sharing companies have, therefore, introduced liability insurance for their drivers, but does it cover collision damage to your auto as well? It makes sense to check closely and talk to your auto insurance agent to make sure there are no unpleasant surprises in case of an accident.
If you rent out a portion of your home or a separate dwelling, you can’t assume that you are covered in case of an accident. Most insurance companies now have exclusions that deny coverage for rental related incidents. Some rental company services, including AirBnB, do offer liability insurance for hosts and some property damage coverage for you. But, if you’re doing a direct rental by owner, you must talk with your insurance agent to get the proper coverage added. You need sufficient liability coverage in case a guest sues you as result of an incident while staying at your property, and you need to make sure your property is covered if a guest causes major damage, such as a fire.
Carefully consider all the pros and cons as you decide whether or not to leap into the sharing economy, but, first, make sure you take care of the financial risks.
Any opinions are those of Dave Werle and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse the entities mentioned above.