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Personal Perspective


By June 1, 2010No Comments

If you live in an urban area, owning a car can be both expensive and a hassle. Finding a parking spot can be next to impossible. Paying for parking can leave a major hole in your wallet. Due to the sheer number of drivers on the road, insurance costs tend to be higher in large cities. Fuel economy suffers during city driving because of the relatively slow speeds and frequent stops. Consequently, many city dwellers are saying no to car ownership and relying on alternatives. Mass transit remains an essential option, but a relatively new idea is taking hold in U.S. cities: Car sharing.

According to, at the beginning of 2010 there were 27 car sharing programs in the U.S., serving 388,000 members and sharing 7,500 vehicles. They go by names like Zipcar, Car2go, City CarShare, and Community Car. The programs charge an annual membership fee and some charge an application fee. Zipcar, for example charges a $50 annual fee and a $25 application fee in the Washington, D.C. area. A separate fee applies for each use of a car (for example, $30 for a four-hour reservation), which covers gas, insurance, and a specified number of miles.

When a member needs a car, they reserve one by phone or online. The program directs the member to a parking spot where the car is located. The member unlocks the car with a “zipcard” by holding the card up to the windshield (the keys are inside). The member uses the car and returns it to a designated parking spot by the end of the reservation time.

The types of people likely to use a car sharing service include:

  • Those who normally use public transportation but who need their own vehicle on occasion
  • Those who own one car and occasionally need a second
  • Those who own cars but occasionally need a larger vehicle
  • Those who can’t afford to buy a car but can afford the membership fees
  • Those who want to avoid the inconvenient aspects of car ownership, such as maintenance, fees, and storage costs

A person using a car sharing service takes risks similar to those she would take while renting a car. They might incur legal liability for injuring someone or damaging another’s property while using the car. They might suffer injuries in an accident, resulting in medical expenses and lost income. They might damage the vehicle and become responsible for repair costs. The car sharing service provides Liability insurance, but the borrower has no guarantee that the amount of insurance will be enough to cover all the damages. Also, that insurance might not apply if the member lets an unauthorized person drive, such as a “designated driver” during a night on the town. Car sharers might want to buy a Named Nonowner Auto insurance policy, which will cover liability, medical, and uninsured or underinsured motorist losses over and above what the car sharing service’s policy provides. Also, certain Umbrella Liability policies might cover damage to a borrowed vehicle if the car sharing service’s policy does not pay. Our professional insurance agents can identify insurance companies that offer these types of coverages and explain the differences in coverage and cost of the various policies.

For people living in areas where it is available, car sharing might be a very sensible alternative to owning a car. Like any special service, it carries certain risks. However, by making some simple arrangements ahead of time, drivers can take advantage of these services and be confident that they’ve limited their financial risks.