United States: The Sharing Economy: Are You Covered If Something Goes Wrong?

Companies like Airbnb and Uber are considered pioneers in this new era of the "sharing economy." This innovative way of doing business, allowing individuals to commercialize what ordinarily is for personal use, has created an entirely new marketplace in many cities around the world. However, as with most emerging markets there are new and unexpected risks. Airbnb, Uber, and other new companies who operate in these emerging markets are challenged to respond to change and manage these unforeseen risks quickly. Airbnb is currently receiving pressure from numerous states to be more proactive in managing and curing potential risks.

Of late, Airbnb has been in the headlines due to a devastating death at a rental in Texas.1 Many questions are being asked. One of the biggest is, "Who is responsible for keeping renters safe?" And whoever that is, do they have adequate insurance coverage?

A family rented a Airbnb cottage in Texas. A rope swing hung from a tree directly outside of the cottage. A father was testing the swing before he would let his children use it, when the tree trunk broke in half and fell, hitting him in the head. The tree trunk hit him so hard that most of his brain activity ended immediately and he eventually died from the injury. Airbnb sent condolences to the family, and the family was eventually able to recover from the homeowner's insurance policy.

However, many guests might find there is no insurance to recover. Many homeowner's policies for residences exclude coverage for commercial activity, such as Airbnb rentals.2 For example, USAA allows homeowners to rent out a room occasionally, but not for business purposes. Allstate has a homeowner's policy that allows homeowners to rent out their residence while still maintaining liability coverage, but only for a few weeks a year.

In an attempt to protect those who may become injured, and whose claims are denied by homeowner's policies, Airbnb has recently introduced free "secondary" coverage up to $1 million in liability to its hosts in the United States. The program is called Host Protection Insurance. Other than this secondary coverage, Airbnb has a limited list of safety tips for hosts but does not appear to actually inspect any of the properties or verify that homeowners have in fact notified their homeowners insurance companies of their commercial activity.3 For renters, Airbnb has a list of safety tips for renters, which includes a suggestion to sign up for travelers insurance and tips on how to be a "considerate guest," but does not provide a free travelers insurance program to match the one it provides to hosts.

Uber, the widely popular phone app that connects riders and passengers, has been working over the past two years to rectify its insurance gaps as well. When Uber first started, its insurance strategy was to have drivers make claims under their personal automobile insurance if they were involved in an accident while working. Uber would only cover the cost once the personal automobile insurance denied coverage. However, just as with most home insurance policies, standard automobile insurance policies contain standard exclusions for commercial use of vehicles. Even more, a driver's failure to disclose commercial use may render her auto policy void.

Last year, in response to pressure in many states, Uber was forced to change its insurance strategy. Uber began providing primary insurance and contingent collision insurance for the period when a driver is matched with a passenger or has a passenger in the car, and expanded that coverage this year to include the time the driver spends waiting for a passenger. However, just like Airbnb, Uber's problems have become more serious, extending beyond the expected automobile accident to several incidents where its drivers have been accused of sexual assault.4 On its website Uber says it "is committed to safely connecting driver and riders."5 Uber states that it conducts background checks on its drivers and provides a code of conduct. Many are arguing that this is not enough, that companies like Uber and Airbnb owe a greater duty to their customers, and should require more from their drivers and hosts. Or, at minimum, they should be required to carry complimentary insurance for all customers in the event of death or injury.

Time will tell if Airbnb's Host Protection Insurance program will provide adequate protection for renters.6 Consider the time and difficulty of first requiring the injured person to make a claim under the property owner's homeowners insurance, go through the claims process and be denied, and then start an entirely new claims process through another insurance program. Imagine being denied under both policies and having to bring a lawsuit. It seems as if this program may be geared more at deflecting adverse publicity than protecting customers. Similarly, Uber has changed how cities talk about accessibility and travel on their roads, but is it doing enough to protects its passengers? It just recently began providing collision insurance for its drivers. However, when people all over the world come into contact with strangers in a car, anything can happen. Who should be responsible when a customer is injured or assaulted during a ride?

Regardless, Airbnb is in the hot seat in cities like New York, San Francisco, and Washington DC. With this new Home Protection Insurance program many questions are left unanswered. Will Airbnb be there when claims are filed and lawsuits follow? Will renters continue to feel that Airbnb is a safe and trustworthy way of vacationing? Airbnb is valued at over $25 billion. Is it doing enough? What will become of Airbnb now that it has stepped into the role of insurer? And are you as a homeowner, property owner, host, or renter adequately insured?

Footnotes

1 https://medium.com/matter/living-and-dying-on-airbnb-6bff8d600c04

2 http://www.oregon.gov/DCBS/insurance/news/Pages/2014/sept192014.aspx

3 Not only would site visits be costly for Airbnb, conducting visits would expose it to potential liability for the conduct of its hosts.

4 See e.g., http://www.huffingtonpost.com/entry/uber-driver-sentenced-rape-female-passenger_56264dffe4b0bce347022d25

5 https://www.uber.com/safety

6 Also, note that Airbnb still maintains international host rentals in countries like Taiwan. This Host Protection Insurance program will not provide coverage for guests outside of the United States.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions