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RelayRides Accident Raises Concerns about Liabilities of Access Economy

| Wednesday April 25th, 2012 | 1 Comment

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Call it whatever you like – the sharing economy, collaborative consumption, the peer-to-peer marketplace, the access economy – but there is no denying that the idea of renting other people’s stuff or loaning out your own for cash is catching on. Fast Company predicted that 2012 would be the year for explosion in the peer-to-peer accommodation market pioneered by Airbnb. And it seems that this growth is expanding to include other renting arrangements as well, with dozens of online services popping up to capitalize on the trend.

Sites like Getaround, Spinlister, and Loosecubes have opened up the sharing market for other types of goods. Whether you need to borrow an apartment, car, leaf blower, or even a cubicle, there are multiple websites out there that will connect you to someone that’s willing to rent you one (although maybe not in the city you’re looking for). Getable helps businesses rent out their products and Zilok, NeighborGoods, and SnapGoods are designed for listing all different types of items. Still others – like Skillshare and Taskrabbit - are moving into services. And Uniiverse is attempting to combine service and rental offerings with social activities, all on a single platform.

These websites are creating a new kind of economy where regular Joes can make extra cash by loaning out possessions they don’t need and people save money by renting instead of buying. Skilled individuals that may not have the time or resources to launch and market their own business also have a platform for offering their services and expertise. In addition to these economic benefits, this new sharing model also reduces resource use and consumption by decreasing the production of new goods.

This all sounds great, but a recent incident is bringing attention to some of the liability issues associated with these borrowing arrangements. An article in the New York Times details the complicated liability situation resulting from a fatal accident that occurred when someone who rented a car through RelayRides crashed into another vehicle and was killed. RelayRides is a popular car sharing company that has gotten backing from GM and Google. The driver injured four people that were in the other car, and although RelayRides provides $1,000,000 in liability coverage to renters, it doesn’t look like it’s going to be enough to cover their medical claims.

According to the owner of the rented car, Liz Fong-Jones, RelayRides sent her a check to cover the cost of replacing the car, and was supposed to step in to cover any claims from the accident. However, Liz’s insurance company eventually got involved, and since it’s possible that the claims for the accident could total between $1.2 and $1.5 million, additional coverage may be needed. Apparently RelayRides told her insurance company to deny the claim because they have an interest in making sure insurance companies will cover people using RelayRides. But if they do, it’s possible that Ms. Fong-Jones could be held responsible for the additional costs. And RelayRides has not yet agreed to step in and cut a check to cover this potential liability.

There is also the question of how insurance companies might react to finding out that their clients are potentially taking on additional risk by renting out their homes or cars. Ron Lieber, the New York Times author that’s been covering the RelayRides story, reported that he’s gotten an influx of emails from readers concerned about the implications of renting their apartments on Airbnb. On this point, Airbnb’s terms and conditions are clear. They state that “Airbnb is not responsible for and disclaims any and all liability related to any and all listings and accommodation.”

Given the potential for problems to happen as a result of these sharing agreements, it’s only a matter of time before serious incidents like the RelayRides accident shine an even bigger spotlight on the potential liabilities associated with using Airbnb and other sharing services.

[Image credit: Michael Mandiberg, Flickr]

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Kara Scharwath is a corporate social responsibility professional, marketing consultant and Sustainable Management MBA Candidate. She is currently working as a Graduate Associate in Corporate Citizenship at the Walt Disney Company while pursuing her degree at Presidio Graduate School. Follow her on Twitter @karameredith.


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  • Randy White

    Bright Neighbor was a leading company to pioneer this space, and are about to scale from outside of Portland to the entire US on mobile. Exciting times.