Across Canada, “sharing” services like Airbnb, Uber, and Lyft are quickly gaining popularity. However, while the idea of signing up to provide ride- or home-sharing to make a little extra money may be very appealing to some, doing so also presents challenges many consumers might not foresee. That includes incidents which fall into so-called coverage gaps between what their own insurers provide, and what the insurance policies offered by those companies provide. And often, the reason they don’t know about those gaps is because many simply don’t tell their insurers they’re involved in the sharing economy.
In fact, a recent poll found that about 1 in 12 people living in Quebec already share their homes or cars through these programs, and it’s expected that this number will grow as time goes on, according to a report from the Chambre De L’Assurance De Dommages. This type of participation is particularly common among millennials, especially if they have a college education. But again, doing so also often puts them in a difficult situation where their standard insurance coverage is concerned.
A close look at the problem
Indeed, of the roughly 8 per cent of respondents in the sharing economy, 44 per cent of them said they have not let their respective insurance companies know they are using their cars to drive people around, or letting short-term renters stay in their homes, the report said. Furthermore, more than 1 in 4 also said that despite that lack of notice, they had to call their insurers to file claims.
That may run into the coverage gap detailed above, and could potentially leave consumers holding the bag when it comes to being financially responsible for the repair costs caused by an accident or other type of damage their homes or vehicles suffer as a direct result of their participation in the sharing economy.
Other things to consider
Insurance may be a pressing need in Quebec in particular, where there is always a significant rental market anyway, the report said. However, with each closing lease, property owners should at least consider changing their insurance coverage to better meet the needs their homes may have developed over the years. However, nearly 3 in 5 do not do so, even when they have to renew their insurance coverage anyway. That, too, could lead to significant gaps in coverage that leave owners exposed financially.
The best advice anyone in the insurance industry can give to consumers is to regularly revisit their insurance needs and compare them to what they actually have for coverage. If, in doing so, they spot areas where something has changed for which they would not be covered in the event of an accident, that’s something they can easily address when it comes time to renew. This is true whether they participate in the sharing economy or not, but if they do, that can create an even greater importance when it comes to ensuring coverage matches need.
“I agree it’s dangerous to get caught up in the ‘renew as is’ trap,” says Karen Roller, Underwriting Director at APRIL Canada. “Product offerings continue to change, limitations may be applied or broader coverages may be available. If property owners do not review their policy with their broker at least once a year they can be missing out on coverages or savings or have gaps that they weren’t aware of. On the other side, brokers should be reaching out to review these coverage options as well as to confirm any occupancy changes or renovations.”