Car Swap, California Style

Posted: October 4, 2010 in Car Sharing, Environment, Fuel Economy, Los Angeles Specific Issues
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In Los Angeles, a trip to IKEA can be treacherous. You need at least two people and an SUV or pickup truck combined with some urban survival skills. Tempers flair as angry, shopping-weary drivers attempt a tricky parking maneuver – backing into a parking space. Then you have to load all those heavy and bulky items into your car. Don’t expect any help from an IKEA employee; you’re on your own.

There are many situations when you need a different ride for a short amount of time. Finding a rental car to suit your purposes can be difficult and expensive. You’ve already worn out your borrowing privileges with your only friend with a pickup truck. And then there are the thorny issues of insurance and what if you wreck a friend’s car?

Things are about to get easier.

On September 30, 2010, Governor Arnold Schwarzenegger signed into law Assembly Bill 1871, sponsored by Assembly Member Dave Jones (D-Sacramento). The law, which goes into effect on January 1, 2011, will allow people who are part of a car-sharing network such as Zip Car or CityCarShare to hire out their personal vehicles during the time they are not being used.

If you think about it, in a given 24 hour period, you probably use your car only about 10% of the time to commute to work, do errands, etc. The rest of the time, your car sits idle. Maybe you can make some money while you aren’t using your car.

Up to now, the insurance companies have been the major impediment to car-sharing/rental programs in California. Being paid for renting your car constituted “commercial use” and could invalidate your insurance policy and create a huge mess if someone crashed your car while it was rented. The insurance company could deny coverage leaving you personally liable for anything that happened in an accident. Not good.

Assembly Member Jones’ press release after the signing stated: “The new law will help car owners shrink the cost of owning their vehicles, reduce the need for some people to buy cars, improving parking and traffic congestion, and help the environment.”

I’ll forgive the hyperbole because it’s a simple law that’s good for consumers and insurance companies and it doesn’t add to California’s red ink.

The law prohibits a private passenger motor vehicle from being classified for insurance purposes as a commercial, for-hire, or permissive use vehicle, or livery solely on the basis of it being used for personal vehicle sharing.

In addition, the law prohibits insurance companies from canceling, voiding, terminating, rescinding or non-renewing a policy solely on the basis that the vehicle was made available for personal vehicle sharing.

For the insurance companies, the law authorizes the insurer of the vehicle to exclude any and all coverage afforded under the vehicle owner’s automobile insurance policy while the vehicle is used by a person other than the owner as part of a personal vehicle sharing program.

Vehicle sharing programs typically have a master insurance policy that covers members while the personal automobiles are in use. Many offer higher coverage than most people carry on their own personal policies. Each member is screened and no owner has to rent to someone they don’t feel comfortable with. operates primarily in the SF Bay Area

These car-sharing services are in their infancy. Zip Car is the only one operating in LA right now, however, Zip Car owns its own cars and member cars aren’t being shared yet. only operates in the Bay Area and also operates its own fleet.

Zip Car Zipcard

I found, a start-up based in San Francisco and, already operating in Boston, to be the most interesting services – neither operate a peer-to-peer rental network in California – yet.

The basics: The car owner sets the rates, availability and location. The borrower’s driver license and driving record are checked by the car-sharing service and both the owner and borrower are covered by a master insurance policy. Gas is usually included in the rental price and cars start from around $6 an hour.

The service gets a cut of the rental income and may charge a monthly or per-use fee.

Keys aren’t a problem either. A device is placed in the car allowing the borrower to access the car without keys. Reservations are usually done online and smartphone apps are being developed that will not only provide keyless access to vehicles, but will allow you to search for cars based on type and GPS location and see pictures of the car before you reserve it.

The owner/car and the borrower are both peer-rated, so everyone is encouraged to be on their best behavior.

Check out the short introduction video for RelayRides to get an overview of the program:

In the not-too-distant future, you may be able to rent a truck for a run to IKEA or a Mercedes to impress someone and not break the bank doing it.

Pretty cool stuff, huh?


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