Thursday, August 03, 2006

Carsharing for 18-20 year olds becomes a reality

(Corrected Posting)

The minimum age for carsharing just got lower, sort of.

Last month Philly Carshare quietly announced that 18-20 year olds could join as regular members. This week Flexcar announced they would offer a similar, but not quite the same, opportunity for college students at 5 universities to join.

The coverage of the two programs is different: while both require that the student be included on a parent's personal auto policy, in the Philly program, their insurance is "excess" to the personal policy. This means that in the event of an accident the parents' policy comes into play first, and the carsharing policy only pays claims for any amounts above the limits of the parents' policy. In Flexcar's offering, their insurance continues to be primary and the personal auto policy is excess. Flexcar's offering requires members to pay an additional security deposit, while Philly Carshare does not. It seems likely that Flexcar's security deposit is an internal decision and not a requirement of their insurance carrier.

So far there's no word from Zipcar.

Here's the way Philly Carshare's program works: PhillyCarShare provides $1 million of excess collision and liability insurance to you at no additional cost. Pretty amazing, huh? But if you're aged 18 to 20, we do require you to carry your own very basic insurance at Pennsylvania minimums (Bodily injury (one person): $15k; (all people): $30k; Property damage: $5k). The procedure for joining is to e-mail or fax them a copy of the parent’s insurance card, have a parent sign a form acknowledging the student's participation in carsharing and verifying coverage on their policy. If the student has their own insurance, they simply e-mail or fax a copy of their insurance card.

Flexcar's 18-20 year old insurance program is billed as a "pilot" at 5 universities around the country:
Emory University, Atlanta
University of California, Berkeley
University of California, Los Angeles
University of California, San Diego
University of Maryland
University of Portland
This program gives Flexcar a significant advantage in negotiating with higher ed, since a goal of many schools is to prohibit Freshman, and sometimes subsequent years, from bringing cars to campus. The $250 security deposit is refunded when the member turns 21 or they leave the program. Flexcar's description of the program is here .

Philly goes one step further, promoting a $0 deductible damage option by encouraging members to pay their PhillyCarShare bills using a qualifying Visa card. These include: Visa Classic, Visa Secured, Visa Gold, Visa Platinum, Visa Signature. They warn about Visa debit cards and indicate that members with Mastercard and American Express cards should check with the issuing bank about coverage. In the past Visa and other "gold card" issuers have imposed limits on coverage for rental longer 2 weeks, as well as other limitations, so it will be interesting to see how they control their expenses with carsharing.

It's worth remembering that Zipcar was the first to provide coverage for 18-20 year olds in their unique program that started in the fall of 2004 with Wellesley College, near Boston. In that program the college picked up the coverage for younger drivers as part of its general liability insurance. The coverage was similar to that extended to students driving a university vehicle, such as for an "outdoor club" event.

With these offering, hopefully when insurance renewal comes around next time for all carshares, there will be a lot more coverage options on the table. National Indemnity, can you hear me?