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Vero Voice

How the sharing economy is blurring insurance lines

Richard Godman

By Richard Godman
Manager Technical Underwriting, Personal Insurance

16 November, 2017

Until recently, most New Zealanders’ lives had well defined boundaries that made it easier for insurers to assess and price risk. 

But the sharing economy is changing the way we use our assets and belongings – and blurring the lines of traditional insurance policies. 

“The core of the sharing economy is people renting things from each other.” The Economist

Why is the sharing economy blurring lines?

The rise of platforms that allow us to rent out our personal belongings mean that people are now making money from their cars, homes, clothes and even their money. 

This raises questions for insurers about when something you own stops being for personal use, and starts to be a commercial asset.

For insurers, the sharing economy changes the amount of risk that assets face and makes it harder to put things into traditional commercial and personal insurance buckets.

For example, a basic house insurance policy covers owner-occupiers on the assumption that only close friends and family will be invited to their home. But listing a home on Airbnb opens the door to strangers staying in the family home, and the risks that come with not knowing who your guests are. 

Personal or commercial - why does it matter?

At Vero, we’re developing new ways to help our customers better protect themselves as they embrace Airbnb, Uber, and other assets of a sharing economy. 

But if you’re making money from your assets, especially a car or house, it’s possible a commercial insurance policy will suit your needs better than a personal one. You may not even need to pay more in premiums.

If you’re not sure whether your policy covers how you’re using your assets, speak to your insurer or broker about the insurance you have in place and whether you need a different solution to meet your needs. 

Are you covered? What to look out for in your insurance policy:

Car insurance

Home insurance

You sometimes drive for Uber or another ride-sharing platform

You rent out your car for others to use                          

You're renting out rooms in the home you live in         

You’re letting out an entire home (or holiday home) for casual use by paying guests, but you frequently stay in it yourself 

You’re letting out an entire home (or holiday home) for casual use by paying guests and you have no intention of staying there yourself  

- Check your policy for conditions on using your car to carry fare paying passengers

- You may need a commercial motor insurance policy

- Check your policy for any conditions around your car being used for hire

- You may need a commercial motor insurance policy

- Check your policy for terms around guests and commercial or business use

- Your ordinary home insurance policy may cover you for accidental damage, but not deliberate damage

- Check your policy for terms around guests and commercial or business use

- Check for terms around homes that are unoccupied

- Your ordinary home insurance policy may cover you for accidental damage, but not deliberate damage

- You may want additional cover for things like loss of income cover if damage to your home prevents guests from staying

 

- Check your policy for terms around guests and commercial or business use

- Check for exclusions around homes that are unoccupied

- It’s likely that you’ll need a commercial insurance policy

- The Earthquake Commission probably won’t cover you if you don’t plan to stay in the home 

- You might want cover extensions like ground up natural disaster cover, and loss of income cover if damage to your home prevents guests from staying.

 

Another option is to check with the platform you’re using to rent out your belongings. Some platforms may offer built in insurance cover, but it’s important to check the limits and how those compare to your own insurance policies.

Temporary rentals versus traditional tenanted properties

If you’re letting out a home on Airbnb, it’s important to remember that traditional insurance for rental homes may not cover you.

That’s because temporary rentals have more visitors, and fewer checks, compared to a normal tenancy agreement. For example, Vero’s policy defines a ‘tenant’ as someone who holds a tenancy agreement with you that’s not less than 90 days.

Landlord cover often contains conditions around how you select and inspect your tenants that you’re unlikely to be able to meet through platforms like Airbnb, so don’t assume that traditional landlord insurance will cover you.

For more information about insurance with Vero when you’re listing your home on Airbnb, see here.

Want more information?

For more information, see Vero's House insurance and Car insurance options. Or if you're ready to buy a policy or need personalised insurance advice, contact a broker or adviser.

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