The “gig economy” & how to protect your assets

The gig economy, also referred to as the sharing economy or the collaborative economy, is virtually an economic model wherein goods and services that are used by many people in exchange for compensation. If you own something, the gig economy allows you to rent out that thing to a user for money – whether that’s a car, a trailer, a cottage, a condo, a home, and so forth. Both Airbnb and Uber are excellent examples of the gig economy, but there’s so much more in that realm as well that is simply not as well known, including the rental and use of swimming pools, parking spaces, and so on.

Sounds like a great deal, right? You have a car – and you could always use it to get a little extra income. Or, maybe you have a recreational vehicle that you only use a few times a year, and you could win back some of what you invested in it by letting a few strangers take it out for a spin here and there for a fee. Most participants of the gig economy will use digital platforms wherein they offer their services. The spike in digital technology has heavily contributed to the expansion of the gig economy in recent years. Users can pay directly through online platforms for goods and services, and hosts or owners can list their assets on the form in no time.

Panda7 is here to lay it out bare and give you some insights on how to protect your assets.

What’s the problem with the gig economy?

For the most part, the gig economy is a great way to earn an extra income and it costs very little to get into. Unfortunately, there’s some risks, too.

See, you’re renting out your home, your cottage, or even a vehicle you use to a total stranger. Even if that stranger has all the best reviews in the world, accidents can happen. Whether you’re renting a parking spot for a few days or your summer home for a few weeks, it’s a good idea to be prepared, informed, and adequately insured. Not all standard insurance policies will cover damages caused by renters, which means you could be left high and dry in the event of a loss.

Does my insurance cover rental damage or losses?

The gig economy poses one detrimental risk to its participants: uninsured losses or damages to the owner or host’s property, or a liability lawsuit filed against them due to injuries or property damage sustained while renting. Very few standard insurance policies will automatically cover losses or damages while your assets are being used to rent. This is because, when you start renting out your vehicle, your property, whatever, that then becomes a business asset, and violates the terms of your contract with your insurance company. As a result, your average property and casualty insurance is likely not enough to cover whatever rent situation you’re engaging in.

Let’s break down a few examples of renting in the gig economy and how to protect yourself in each one.

If you rent out your home…

Home insurance will cover your property for private life use. As soon as you begin renting it out, or even just a portion of it to short-term rentals, you’ll need to purchase insurance that covers the commercial side of renting. In addition, your commercial coverage may state some exclusions, so you’ll want to consider these potential additional costs and determine whether your renting escapade is worth the cost. Some insurance companies offer home-sharing insurance as an add-on, but this isn’t applicable to every insurance company. You may even need to switch providers to benefit from this coverage.

If you rent out your vehicle/offer driving services…

What if you rent out your trailer, or you offer services as a driver?

Well, in both circumstances, driving “use” is used to calculate premiums and determine coverage, so in both cases you’ll have to call your insurance provider to tell them about your vehicle’s new added usage. Make sure your insurer actually accepts this new use, otherwise you could risk voiding your coverage. You may need to purchase an added commercial vehicle policy to ensure you have protection.

If you rent out a pool or a parking space…

Both your pool and your parking space may ordinarily be covered by your home insurance. Pools in particular offer a series of risks, such as serious injuries or drowning, and renters may be more inclined to drink, party, or otherwise make “unsafe” use of your pool. The same goes with your parking space – you never know who might be using the space improperly, parking incorrectly and bothering your neighbours, or even getting into an accident when pulling out of the parking space. You’ll want to be clear about your intentions with rental activities to your insurer before you rent out either of these assets, or they could refuse to cover you if you need to make a claim.

What about insurance offered by gig economy companies?

Some sharing services and platforms offer their own unique insurance, but it’s important to note that not all insurance coverage is created equal, and this coverage may sometimes lack. It can be automatically included, like with Airbnb insurance, but this doesn’t always mean it’s enough. Depending on your risk tolerance, it might do you well to review the extents of the coverage offered by the platform and make judgements accordingly if it’s adequate enough to cover you and your assets. In all cases, it’s still important to go to your personal insurance provider to tell them about the situation, in case the sharing platform’s insurance is insufficient and you need to turn elsewhere to make up for the remaining costs.

The bottom line? It’s your property, so you look after it the way you think is best! You’d never want to lose out on your hard-earned assets just because some renter wasn’t being careful. Make your own decisions, but make them wisely – and keep your insurance provider in on the loop!