Monday, August 15, 2011

Markets in Everything: Neighbor Car Sharing

Boston -- "Since its launch in 2000, Zipcar has shaken up the car rental market and grown to include more than 550,000 members in the United States, Canada, and the United Kingdom. Its main selling points? The ability to reserve vehicles by the hour instead of by the day and the convenience of pickup locations all over major metropolitan areas. Similar services now include the nonprofits CityCarShare, I-Go Carsharing, and e-Go Carshare.

Now, new services are taking this model a step further. Instead of using a fleet of Zipcars, RelayRides, WhipCar, Spride Share, and Getaround allow car owners to rent out their vehicles to their neighbors when they’re not in use.

“Economically, it makes a ton of sense for both sides,” says Shelby Clark, the chief executive officer of RelayRides, which currently operates in Boston and San Francisco."  

MP: See RelayRides price list above for car sharing in Cambridge, MA.  Hourly rental fees range from $5.50 for a 2001 VW Jetta Wagon to $12.00 for a 2003 Ford F-350.

HT: Kevin Hassett

Update about Insurance (from the RelayRides website):
  • Do I need my own insurance to borrow a RelayRides vehicle? Nope!

  • How does insurance work?

    During your reservation, RelayRides protects you with our best-in-class $1,000,000 comprehensive insurance policy. This means you don't need your own insurance - hooray savings! Should you be involved in an accident, you'll only be liable for a $500 deductible, which we'll lower by $100 if you're prompt about reporting damage yourself.

8 Comments:

At 8/15/2011 1:53 PM, Blogger juandos said...

Hmmm, how will that effect one's auto insurance coverage and rates?

 
At 8/15/2011 2:41 PM, Blogger Highgamma said...

Clearly insurance is item number one. The companies seem to get an insurance policy that covers liability and damage while the car is being rented.

This is an interesting phenomenon. I will have my students discuss this when we talk about production functions and technological change.

 
At 8/15/2011 2:47 PM, Blogger Larry G said...

zipcar is an innovation but there are real questions about insurance and liability.

this is an excellent illustration of the pros and cons of govt involvement and regulation.

it won't be long before some dolt in a zip car savages some unsuspecting innocent and shags the financial responsibility ....

in a true free market - that would be just tough cookies..

it would be your problem to figure out how to get fair compensation... when the guy who did it says he has no money.

why.. I'd call this the quandary of the individual mandate.

should the big, bad, nasty, incompetent govt mandate that drivers of Zip cars pay for insurance - adequate enough to compensate those damaged

or we leave that up to the driver and Zip Car?

I notice on my lovely insurance premium that I just paid that there is a line item that says - "uninsured motor vehicle bodily injury" - 20 smackers... wiped up my good driver discount.. and then some.

sorta sounds like some socialist commie concept to me....

 
At 8/15/2011 3:02 PM, Blogger Ron H. said...

"Hmmm, how will that effect one's auto insurance coverage and rates?"

I suspect they will go so high that people will wish they had never thought of renting to their "neighbors".

I don't see how this "makes a ton of sense for both sides".

It sounds like a great deal for the renter, but I can't imagine renting my pickup to people for $12/hr. I could only lose.

If people who actually run car rental businesses can't rent for these prices, why would I think I can?

Sharing a car with my wife is trouble enough, so I don't see how sharing with a neighbor would be less problematic.

 
At 8/15/2011 3:38 PM, Blogger Methinks said...

blech. After growing up in the Soviet Union, I'm allergic to communal anything.

 
At 8/15/2011 3:49 PM, Blogger Ron H. said...

"or we leave that up to the driver and Zip Car?"

Either you haven't rented a vehicle lately, or you didn't read your contract and notice the various charges you paid.

The owner of a vehicle is responsible for damage caused by that vehicle. In order to STAY in business, something you don't seem to consider important to business owners, a car rental company will insure against the type of loss you describe. They require you, the renter, to either provide proof of coverage, or pay for coverage they will obtain for you.

The uninsured motorist coverage you describe is optional. If you don't think it's worth the price, ask your insurance company to remove it from your policy.

While your personal auto policy may provide coverage when you loan your car to a neighbor, when you charge them the game changes. You will either find yourself cancelled, or paying premium amounts you never imagined could be typed into that tiny box at the bottom your statement.

 
At 8/15/2011 4:00 PM, Blogger Ron H. said...

Methinks

"blech. After growing up in the Soviet Union, I'm allergic to communal anything."

The glimpses into that world that you have provided here, and your economic insights have been educational for me, and most likely many others. In addition, your writing style is delightful. Have you ever considered writing a book to help counter the collectivist trash we are constantly inundated with?

 
At 8/15/2011 4:06 PM, Blogger Larry G said...

" require you, the renter, to either provide proof of coverage, or pay for coverage they will obtain for you"

been a couple of years since I rented a car but the last time I did no proof of coverage was required and all I had to do was check the box that declined the rental company coverage.

are you saying that rental companies and Zip car will now require proof of coverage?

 

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