RelayRides, a car-sharing service that matches car owners withthird-party renters, agreed to stop conducting business in New YorkState after receiving a cease-and-desist order from StateSuperintendent of Financial Services Benjamin M. Lawsky, whoaccused the rental service of false advertising and called itsinsurance coverage through Hudson Insurance Co. of New York“illegal and inadequate.”
|Lawsky (pictured) also issued a consumer alert to warn potentialNew York RelayRides renters that the company's auto coverage couldleave them financially accountable for an accident, despite thecompany's claims.
According to a press release from the New York State Departmentof Financial Services (DFS), RelayRides informs New Yorkers thatthey would not be liable for out-of-pocket expenses in the eventthe car being rented is stolen or involved in an accident, as itmaintains a $1 million liability policy through Hudson for injuryor damage to third parties.
|However, the DFS notes that in New York State, an owner'spersonal liability policy provides coverage to any person whodrives the vehicle with the owner's permission, and that state lawdoes not permit an insurer to exclude coverage for a renter. Thatmeans an owner may be personally liable for any accident thatoccurs while the vehicle is being rented, and could be heldpersonally liable for property damage, theft, bodily injury, ordeath that occurs during the rental.
|The DFS also notes that in New York State, renting out a vehiclecould violate the terms of an owner's personal liability policy,which could cause their insurer to cancel or not renew the policy,despite claims by RelayRides that participation in the rentalagreement will not affect a vehicle owner's personal liabilityinsurance. The DFS investigation into the company's insurancecoverage is ongoing.
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