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NJ bill addresses peer-to-peer car-sharing insurance responsibilities

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Insurance | Legal
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New Jersey legislators are considering a measure that would regulate peer-to-peer car-sharing, such as what Turo offers, which includes insurance liability definitions.

During a Nov. 3 Senate Commerce Committee hearing on bill S2979, Insurance Council of New Jersey Vice President Gary La Spisa said the bill seeks to provide clarity to the industry that already exists in the state through Uber, Doordash, and others but under insurance structure laws that don’t fit that type of business model.

“There are claims out there today that fall into maybe some gaps and the vast majority of claims, whether for a traditional rental car or for an app-based rental, are already covered by comprehensive insurance policies,” he said. “This bill addresses insurance for the people who don’t have insurance or don’t have adequate insurance because maybe they don’t have a car.”

S2979 follows a legislation model written by the National Council of Insurance Legislators (NCOIL) that lays out a framework for states to follow in mandating shared vehicle owners and drivers carry motor vehicle liability insurance with coverage amounts no less than the minimums required by the state they’re in.

Enterprise Rent-A-Car Vice President of Finance Dean Thompson told the committee he supports the NCOIL model and the proposed New Jersey bill but wants a separate issue addressed – that peer-to-peer car-sharing companies don’t have to pay airport access, transit, and security state fees like car rental companies do, which creates “an unfair playing field” for companies like Enterprise to compete to offer affordable ride rates.

New Jersey Association for Justice President Jim Lynch said the peer-to-peer companies are in the best position to hold the primary insurance coverage.

“Our major concerns with this bill involve liability and insurance coverage both for the drivers of the peer-to-peer shared car, any passengers in that car, and any others who may be involved in an accident with a car while the car is being shared,” he said. “The New Jersey Association for Justice strongly recommends that these peer-to-peer car-sharing companies be regulated more like transportation networks in this legislation when it comes to liability insurance and other issues regarding insurance. …S2979 would allow the peer-to-peer company to step into the shoes of the owner or driver of the car but only up to the minimum state limits. This is not enough coverage.”

He added that each company should be required to provide $1.5 million in liability coverage from the outset, which is identical to what’s required for Uber and Lyft. Neither the bill nor the committee addressed a specific amount above state insurance minimums. The bill also doesn’t address who is authorized to request collision repairs, whether that would be the peer-to-peer company, the vehicle owner, or the driver at the time of the accident.

According to the New Jersey Monitor, legislators have attempted to raise liability and uninsured/underinsured auto insurance coverage limits in recent months, including a successful push that will increase bodily injury liability coverage minimums next year and in 2026.

The bill does state, however, that “a peer-to-peer car sharing program shall assume liability… of a shared vehicle owner for bodily injury or property damage to third parties or uninsured and underinsured motorist or personal injury protection losses during the car sharing period in an amount stated in the car sharing program agreement which amount shall not be less than those set forth in section 20 of P.L. 1973, c.307 (C.39:3C32 20), section 2 of P.L.1968, c.385 (C.17:28-1.1), and section 4 of 33 P.L.1972, c.70 (C. 39:6A-4).”

Exceptions outlined under state law are when the shared vehicle owner “makes an intentional or fraudulent material misrepresentation or omission to the peer-to-peer car sharing program before the car sharing period in which the loss occurred; or acts in concert with a shared vehicle driver who fails to return the shared vehicle pursuant to the terms of car sharing program agreement.”

The bill would require peer-to-peer car-sharing programs to assume primary liability if there is a dispute as to who was in control of the shared vehicle at the time of the loss.

Liability insurance is to be held by each shared vehicle owner, driver, peer-to-peer car sharing program, or all three.

Kenny Montilla, Turo senior government relations manager, the bill would “provide an important framework that clarifies the responsibilities of each party in the peer-to-peer carsharing transaction.” However, he voiced opposition to raising insurance coverage amount requirements because that would ultimately raise ride rates for users, which would go against Turo’s affordability model.

Committee member Sen. Jon Bramnick (R-District 21) said he understood the reasoning for the driver to be held responsible for insurance coverage but wanted to know how peer-to-peer companies are currently handling lawsuits over underinsured or uninsured users.

“We want to clarify and ensure that there are no lapses in coverage; to ensure that we have that ability to step into the shoes of any underinsured, uninsured vehicle owner [or] vehicle driver,” Montilla said. “Our ability to do that is given to us in this bill via the insurable interest, which allows us to step in and provide that support. I can’t speak with 100% certainty across the board as to what happens. However, what I can say is this bill, I think, currently addresses your exact question.”

No votes were taken on the bill.


The New Jersey state capitol of Trenton. (Credit: Ultima_Gaina/iStock)

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