Insurance and the sharing economy

If you sublet your apartment on Airbnb to a guest who damages it, will your home and contents insurance cover the damage? Or if you rent your car to a stranger via Australian startup Drive My Car or Car Next Door and it’s stolen, will your comprehensive car insurance cover the loss?

The sharing economy is revolutionising the way we do business in the 21st century. Around the world, nearly two million guests woke up on New Year’s Day in an Airbnb bed, while 15 million people got around town the night before in an Uber car.[1]

Today, the global sharing economy is worth more than US$15 billion and according to Pricewaterhouse Coopers is tipped to reach US$335 billion by 2025. A 2015 research paper, predicted that some of the least developed sectors of the sharing economy - such as finance and insurance - will be some of the most significant within the decade.

What is the sharing economy?

The sharing economy - also called collaborative consumption or peer-to-peer (P2P) lending - matches people who want to rent, lend or share goods or services.  It’s made possible by the development of online platforms that reduce the cost of transactions and allow you to check the track record of the person you are dealing with.

But who is protecting the assets being shared and the money offered to share them?

"... sharers need to check the fine print. Their insurance cover may be limited."

Insurance solutions for sharers

Many sharing platforms include some form of insurance as part of their offering, but sharers need to check the fine print. The cover may be limited. In some cases, P2P lenders are at risk of undisclosed or poorly disclosed commercial activity not being covered by their insurance policies. Or they may not have the appropriate public liability insurance associated with allowing people onto their property.

If you’re in the business of running a sharing economy platform, you may also be exposing yourself to financial and reputational risk.

The rise of the sharing economy has been so rapid that it has created various issues around insurance coverage and exclusions that the insurance industry is seeking to address.

In many cases, your existing insurance policies may be adjusted to cover your P2P activities. Some insurers are also beginning to offer new and modified products to cover theft, damage and public liability for users of Airbnb and other sharing platforms.

If you’re considering sharing an asset or service, perhaps even turning it into a small business, then speak to a Steadfast insurance broker. They will be able to advise you if your existing home, vehicle or small business insurance policies need adjusting. In some cases, they may even recommend a new insurance solution for your new way of doing business, to ensure you are adequately covered, if the worst were to happen.


[1] UBER Newsroom.

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