Looking to Airbnb your car? Chat to your insurer first

By: Vera Nagtegaal, executive head of insurance comparison website Hippo.co.za

“Looking to Airbnb your car? Chat to your insurer first before monetizing your ride”

Lots of people want to try and make money from their cars. Times are tough and expensive, and any extra bit of cash will help keep the lights on. But a warning has been issued this week to car owners to check their insurance policies before they try to monetize their rides.
“It is perfectly understandable for people wanting to earn extra income. One vehicle tracking company for example is considering a type of “Airbnb” option for offering in 2020. Whatever you end up deciding on, make sure that you study your insurance policy’s terms and conditions before you do anything else,” says Vera Nagtegaal, executive head of insurance comparison website Hippo.co.za

Carpooling

All you have to do is find a few people who live along a similar route as you do and split the travelling burden. This involves passengers travelling in a vehicle that is not registered or licensed for commuting purposes.
“The simplest way to divvy up the responsibilities is to travel in a different person’s car on different days of the week, but sometimes it makes sense for one person to be the designated driver and charge the others for the cost of fuel,” says Nagtegaal.
However, this is where some people start to run into trouble. “If you are using one person’s car and money is changing hands, this could potentially be seen by an insurer as a commercial transaction, especially if the money you’re receiving is more than the operating costs,” Nagtegaal warns.
“In this instance, this could mean that your car is being used for business purposes, and you should have a different type of insurance cover – and even a special permit to be in the driver’s seat,” she adds.
Some insurers will consider whether the amount of money changing hands was only sufficient to cover petrol, rather than to earn an income. But find out first, urges Nagtegaal.
Nagtegaal explains that personal policies exclude transporting passengers for hire or those who pay a fare, and such policies won’t cover liability for fare-paying passengers.
“Usually, insurers regard a ‘fare’ as the predetermined amount charged by the owner of the vehicle in return for a service, with the aim of generating a profit,” she adds.
She cautions that if you use your car for anything other than personal use, it is essential to update your insurance policy. “Failure to do so may lead to an insurance claim being rejected.”

What if you want to earn extra cash?

Aside from the rising cost of transport, other household expenses such as municipal and utility bills are also hitting consumers hard. So, some people might be looking at ways to use their personal cars to make money.
Before you do anything, Nagtegaal advises motorists to carefully read their insurance policies to find out what the rules are before attempting to use their cars to earn additional income.
She points out that a number of other car-sharing services have sprung up that allow people to monetise their rides. Most people are already familiar with ride services like Uber and Taxify, which come with their own set of insurance requirements before the driver can even sign up to the system. But, people who are keen on earning money with their cars can also sign up with start-ups such as CarTrip and Rent-My-Ride.
“Although these options are great for people wanting to earn a bit of extra money, drivers must consider how this affects their insurance policies,” says Nagtegaal.
“Even if, as in the case of Rent-My-Ride, the app offers its own liability cover, car owners must ask their insurers about whether they are at risk of not being covered by their existing policy and therefore should update it,” she adds.
“The sharing economy offers exciting new opportunities for people to earn an income without having to invest in assets or do extra work. But, just because the apps are new, doesn’t mean the rules change. People must consider the implications before signing up for the next profitable sharing service,” concludes Nagtegaal.