The Risks of the Sharing Economy in Ontario

The landscape for the sharing economy has drastically changed within recent years with the development of services like Uber, Turo, and AirBnB. These “peer-to-peer” services hold great promise, offering more affordable options for travel, helping to build a stronger and more trustworthy global community, and allowing people to earn an income through their assets.

How does the sharing economy work? The sharing economy is one that allows people to generate revenue by “sharing” their assets, such as cars and apartments, that would otherwise not be a source of income. In the hospitality sector, people are using services like Airbnb to rent out their homes or apartments and services like Uber and Lyft are opening up the possibilities of ride-sharing all over the globe. Prior to these services, people relied solely on hotels and taxi services for accommodations and transportation.

Despite the numerous perceived benefits, many people worry about the risks associated with this type of sharing economy and how the relatively unregulated processes can leave both workers and customers with large liabilities.

What are the risks associated with these sharing services? When engaging with any sharing service, it is important to consider and be aware of insurance coverages and risks for liability. While many of these companies insure their workers, the coverage is typically limited and stringent insurance requirements can make claims processing a bit unclear.

For home sharing services like AirBnB, government regulations may not support commercial use of a home or apartment and insurance coverages are typically very minimal. In the event of any exposure to damages, insurance companies may not provide coverage for homes or apartments that are being used for commercial purposes. It is important to know your risk of potential liabilities before booking with a home sharing service.

Aviva Canada now offers ride-sharing insurance coverage for people who drive paying customers in their vehicles part-time under services like Uber. This type of insurance is not included with standard coverages but can be added onto existing policies. This ride-sharing insurance covers 3 stages of ride-sharing:

• Period 1 – When a driver logs onto the ride-sharing app and is awaiting a customer
• Period 2 – While the driver is on route to pick up a customer
• Period 3 – While the driver is transporting the customer

To qualify for this coverage you must be a licensed driver with 6 years of experience and you must drive no more than 20 hours per week while signed in as an available driver for any ride-sharing service. When engaging with services like Uber as a customer, always make sure to ask whether or not the driver is covered with this type of ride-sharing insurance.

The sharing economy is rapidly growing and there is no sign of it slowing down anytime soon. It is estimated that by 2025, various sectors of the sharing economy could potentially generate revenues of up to $335 billion. While the insurance industry is beginning to make changes to various policies and coverages, there are still a lot of gaps and grey areas that can leave you at risk.

Contact The Ostic Group for more information about insurance coverages for sharing services and how you can protect yourself from potential risks and liabilities.