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?
These are all very relevant questions, and the answers vary. While the sharing economy is revolutionising the way we do business it brings with it the pain points common in early ventures, figuring out the teething products. Still, it is a fast-growing phenomenon. 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.
Today, the global sharing economy is worth more than US$15 billion and according to PricewaterhouseCoopers is tipped to reach US$335 billion by 2025.
Understand the regulations
While the sharing economy offers individuals the opportunity to start a business – or simply capitalise on the availability of their own home or car in the case of Airbnb and Uber – the pace of change has caught regulators and lawmakers off guard.
Airbnb has faced legal challenges over the terms of its contracts and noisy guests, while Uber drivers have had to fight to be covered by insurance. In fact, an announcement early this month means third party insurance is required of any booked hire vehicle.
There is also some confusion around the issue of tax. The ATO has guidelines on the sharing economy and tax, which you can read here.
Insurance companies are also beginning to respond to the evolving needs of the sharing economy with new products, especially where assets such as a car or home are used for mixed private and commercial use.
As the sharing economy evolves and transforms the way we do business, the opportunities for enterprising individuals to kick-start a business, or for existing businesses to expand into new areas, are only just beginning.
Make sure you’re adequately insured
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, peer-to-peer (P2P) providers are at risk of either undisclosed or poorly disclosed commercial activity not being covered by their insurance policies. This may include not having 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 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.
Understanding your insurances and having adequate regulatory knowledge and processes in place will give you the peace of mind you need before taking your business to the next level.
Steadfast Group Limited (ASX: SDF) is the largest general insurance broker network and group of underwriting agencies in Australasia, with growing operations in Asia and Europe. The broker network has 361 general insurance brokers who receive superior market access, exclusive products and services backed by the size and scale of the Steadfast Group. Brokers in the network have access to over 160 products and services which support their business and allow them to focus on their clients' insurance and risk management needs.
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