Am I insured if I rent a Zipcar?

Is there a difference between a rental car and a car-sharing service?

Insurance-wise, there certainly is. 

A car-sharing service such as Zipcar caters to those who occasionally need wheels for a few hours at a time and don’t need to travel far; it’s an alternative to owning or renting a car. You book in advance by smartphone, and you don’t need to go to the airport because cars are typically placed in neighborhoods. Rates are hourly, miles are limited and the price includes insurance and fuel.

With a traditional rental, the car is yours from the time you pick it up until the time you drop it off, even if it sits most of that time. Mileage is usually unlimited. You must provide insurance and fuel on your own or pay extra fees (that are typically rather high) to have the rental agency provide them for you.

For drivers who don’t already own a car, the difference between these types of rentals can be huge.

With a rental car, you can’t drive without at least having liability coverage. If you don’t own a car already, you’ll usually need to buy the liability insurance from the rental agency. Collision coverage is optional -- though going without leaves you personally liable for damage to the rental if you wreck it.

These coverages don’t come cheap: Each type of insurance costs anywhere from $12 to $20 a day. 

And if you are injured in an accident you cause, the cost of medical care isn’t covered unless you have your own health insurance.

If you already own a car,  many – but not all -- car insurance policies extend your coverage to the rental. 

Conversely, the hourly or daily rate at Zipcar, the nation’s largest car-sharing service, includes:

• A combined single limit (CSL) of $300,000 per accident for drivers 21 years of age or older.  This is third-party liability coverage that will cover the costs of bodily injuries and/or property damage if a Zipcar member is at fault. 
• Drivers under age 21 are provided only state car insurance limits (instead of $300,000 CSL).
• Personal injury protection (PIP) coverage that can be used for injuries the driver sustains in an auto accident is provided, at statutory limits.
• The Zipcar itself is covered under a comprehensive vehicle collision policy, when driven by a Zipcar member.

Zipcar members don’t get away scot-free even with this auto insurance coverage. Drivers are personally responsible if costs for damages or injuries exceed Zipcar insurance coverage limits.  Also, a damage fee of up to $750 is due for:

• Third-party claims
• Vehicle damage claims for things like dents, scratches, flat tires, cracked windshield, dead battery, vandalism or theft.
• Unavoidable events, such as hail, wind, flood, etc., that cause damage while the car is in your care.
• Members age 21 or older who have been accident-free for at least the last 12 months have an option to purchase a damage fee waiver (DFW) that will reduce or eliminate the damage fee.  And, if a properly insured third party is found to be 100 percent at-fault, then you're off the hook for the damage fee. 

Rental car agreements vary in what voids out the contract, but with Zipcar, if a member engages in very specific “prohibited uses” of the vehicle he or she won’t be covered by the insurance policy. One such use is “driving while texting, e-mailing, using a cellphone without a hands-free device or otherwise engaging in similar activities that may be prohibited by applicable law.” 

Zipcar differs from some new players in the car-sharing space, for instance Turo and Getaround. Zipcar is owned by Avis and uses a fleet of cars parked in residential areas. Renters using Turo and Getaround book cars owned by other people, in most cases. Personal policies typically exclude coverage for peer-to-peer car sharing networks, so it's advised you buy the insurance offered by Turo and Getaround if you use those services.