In 2012, a vehicle rented out with RelayRides—a site that lets people rent out their vehicles to strangers—was in an accident, killing the driver. An insurance debacle ensued. This past spring, a vehicle driven by someone who had a contract with ridesharing service Uber crashed into another car, which careened out of control and caused a geyser to erupt and a fire hydrant to fly into the air, injuring a pedestrian. That pedestrian is now suing Uber, which claims that it is merely a "technology platform" and not responsible for its drivers.
The question of legal liability in the sharing economy is clearly a tangled mess. Guild.is, a Collaborative Fund-backed company made up of insurance veterans and startup experts, now wants to untangle it by working with insurance companies to create new policies tailored for such situations.
As sharing economy companies working in sectors like transportation, housing, and task assistance begin to mature, they're running up against insurance problems. "It's a huge competitive advantage for those that have it, and a huge need for those who don't," says Greg Golkin, one of the founders of Guild.is. "Insurance carriers don't speak the same language. The sharing economy has introduced a wrinkle into the insurance model."
Think about the transportation sector. Personal auto insurance has been a steady business for decades, backed by reams of data. Now companies like Getaround and RelayRides are telling the industry to change its model—to make it possible for people to rent out their personal automobiles, and in the case of Sidecar, Lyft, and UberX, to use them as taxis.
The industry is understandably slow to act. "You're always going to meet resistance when challenging a core business model that's worked forever. The sharing economy is so young that the data just isn't there yet," says Golkin. "But we've certainly found carriers at this point that understand what's happening, that this is the future, and are excited to sort of work through the challenge with us."
Transportation and housing have been the biggest focus areas for Guild.is because of the high-risk and high-value assets involved. In other cases—say, for a $10 TaskRabbit transaction, insurance doesn't make sense. In many cases, TaskRabbit might be better off paying for damage itself.
Guild.is can't help every company find an insurance policy. The sharing economy insurance industry is still nascent, and in case, some companies "don't deserve to be underwritten," according to Golkin, because they don't have proper risk mitigation policies in place. In the case of ridesharing, risk mitigation policies might include driver background checks, verification of registration, copies of recent vehicle inspections, and quickly booting "bad actors."
Even though there are probably more sharing economy companies seeking insurance than insurance companies willing to work with them. Guild.is is working with both sides simultaneously, and taking on new startup clients as they come. The company is still working on a business model. "At this point, we're really focused on helping companies to find quality insurance in a reasonable time," says Golkin.