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Car-Sharing Company Questioned on Amount of Insurance Provided

Zipcar, the car-sharing service that allows members to rent cars by the hour, may not be providing its customers with something essential to anyone driving a car: adequate automobile insurance. Zipcar members could be exposed to huge liabilities in the event of an accident.

The most coverage Zipcar will provide for members is $300,000 per auto accident. Customers who are younger than 21 are left even more exposed. Young drivers statistically are involved in more accidents than other age groups. Yet Zipcar allows 18- to 20-year-olds to purchase only the state-required minimum for automobile liability insurance. In New York, where Zipcar does a brisk business, that is $50,000 per accident. Cross the river to New Jersey and pick up a Zipcar, the under-21 driver can get only $30,000 of liability coverage. Despite this, the company's website boasts that "comprehensive coverage is included as part of the low hourly and daily rate." Comprehensive? Yes, technically insurance coverage is provided for bodily injury and property damage. The amount of coverage provided, however, is woefully inadequate, especially for many of the large cities where Zipcar does business.

Zipcar's Response to Auto Insurance Claims

Zipcar contends that the $300,000 of coverage has been more than enough coverage for every accident Zipcars have been involved in to date. Statistics show that only 2 percent of bodily injury claims nationwide exceed $300,000. The problem arises with that 2 percent. For a serious bodily injury involving permanent injury or death, what happens after that $300,000 is reached? Well, if you are fortunate enough to have your own car insurance, you should have coverage. But if you do not own a car and have car insurance, your personal assets are at risk. This means your home can be attached and sold and your wages garnished until the rest of any judgment is paid.

Protect Yourself

How can you protect yourself? If you use Zipcar or other similar services regularly, you might want to consider obtaining a nonowner's liability policy. Companies like Farmer's, Allstate, Progressive, Nationwide, and Esurance all sell these types of policies. Otherwise that low rate for using a Zipcar for a quick trip may end up costing you a lot more than you bargained for.

Source: New York Times