Thinking of boosting your income by moonlighting as a cab driver, or letting your car do the earning for you by renting your car out when you're not using it?
Before you get revving, you'll need to understand how the insurance works and more about what the average cost of car insurance is in Australia.
Richard Laycock, insurance expert at finder.com.au, answers some common questions about insurance and the sharing economy.
What kind of insurance do I need to drive for Uber or other rideshare companies?
- Many standard insurance policies forbid drivers from using their car to carry passengers for profit
- Uber's insurance may not cover damage to your own car
- There are a number of specialist rideshare insurance policies available
- If you already have comprehensive cover for your vehicle, you may be able to extend it to cover driving for Uber or other rideshare services - but you'll need to talk to your insurer before you hit the road.
With over 1 million registered users and roughly 13,000 active Uber drivers in Australia, it looks like ridesharing is here to stay. And with competitors such as GoCatch and Lyft eyeing off the Australian market, more and more Australians seem poised to join the rideshare revolution.
But before you get involved, you'll be asking one commonsense question: “Will my car insurance cover this?”
Since ridesharing has taken off down under, Aussies have typically had a hard time obtaining cover for their vehicles. Many standard insurance policies forbid drivers from using their car to carry passengers for profit.
However, much like how services such as Airbnb and Stayz opened up the home insurance marketplace for innovative products, ridesharing has opened up the door for specialist rideshare insurance policies.
Some designated insurance brands specialise in providing car insurance for those wanting to use their car for ridesharing. These policies cost roughly the same as your average car insurance policy and will replace your current third party or comprehensive policy.
There are many regular brands offering rideshare cover too. Allianz was quick to enter the market, offering cover for ridesharing under its Private Car Insurance policy. All that members need to do is inform Allianz that they are using their car for ridesharing. Other brands that offer cover for ridesharing include Bingle, NRMA and RACQ.
Wait, doesn’t Uber cover me?
Yes and no. Uber does offer insurance products for its drivers, which can cover injury and property damage liability, but it’s important to be aware that this is a contingent insurance policy that works alongside your own personal compulsory third party (CTP) policy.
I want to rent my car out instead of driving people around. What insurance do I need?
DON'T FANCY DRIVING PEOPLE AROUND, BUT WANT TO MAKE A BIT OF EXTRA MONEY WITH YOUR CAR?
You could rent your car out when it would otherwise be sitting there decorating the kerb, using the peer-to-peer car share platform Car Next Door.
As with ridesharing, your standard comprehensive insurance policy is unlikely to cover you for renting your car out. One of the major benefits of renting out your car with Car Next Door is that comprehensive insurance is part of the deal: you just pay a $60/month fee to list your car on the platform, and you'll get insurance cover plus the technology and service you need to rent your car out, safe and hassle-free.
If your car is damaged, either during a booking or when you’re using it yourself, you’ll be covered by Car Next Door’s fleet insurance policy. This means that you’ll never be out of pocket if someone borrowing your car is involved in an accident. And if you’re involved in an accident, the most you’ll have to pay is a $500 for Damage Cover Liability, which works like an excess.
The other bonus of renting your car out with Car Next Door is that if your car does get damaged by a borrower (and you'd be surprised at how rarely that happens), Car Next Door will pick the car up, arrange for it to be repaired and drop it back to you.
(If you plan to drive for Uber as well as listing your car with Car Next Door, you'll need separate insurance to cover your rideshare activity).
Will insurance cover wear and tear?
It’s important to note that insurance policies like this won’t cover you for general wear and tear. But any wear and tear on your vehicle is offset by the money it's earning.
It’s important to inspect your car regularly (ideally after each use). Make sure you check for any new damage caused by a borrower and report any issues so that Car Next Door can follow up and recover any repair costs for you.
Author Richard Laycock is an insurance expert at finder.com.au.