There was a time when car ownership was considered an important element of the American Dream. These days, some drivers have mixed feelings about owning a car. Earlier this year, renowned luxury automaker BMW launched a new subscription service for drivers willing to pay $2,000 a month and get behind the wheel of a new car they can switch whenever they like, which means being able to drive a convertible BMW M4 one week before switching to an M5 sedan the next week. When this subscription service was announced, BMW executives explained that American drivers are not as interested in long-term car ownership commitments as they used to be. At the same time, auto leasing, carpooling, personal transportation apps, and car sharing services are also changing the dynamics of driving in the United States.
For some drivers, car sharing may be an interesting option in terms of savings, convenience, or leveraging the cost of vehicle ownership. Here are four things you should know about car sharing.
1. Sharing Has Shifted from Peer-to-Peer to Corporate
The first car sharing services operated on a peer-to-peer (P2P) basis. Essentially, car owners made their vehicles available to other drivers who agreed to certain terms of usage. Over time, the companies behind the mobile app that facilitated the P2P car sharing network got into the business of providing their own vehicles. Investors tend to prefer the corporate business model because it seeks to take market share away from rental car agencies, and thus car sharing companies that provide vehicles have become more popular and efficient.
2. Revenue from Car Sharing Could Increase Your Tax Liability
One of the reasons car sharing services provide their own vehicles is because their corporate structure allows them to manage revenue more effectively. If you have an attractive car you can offer for P2P sharing in a busy metropolitan area, the money you derive could bump you into a higher personal income bracket, thereby increasing your tax liability.
3. Shared Vehicles May Not Be Completely Covered by Insurance
Drivers are supposed to provide most of the insurance coverage when they reserve a shared vehicle. The rates typically include the state minimum in terms of personal injury and liability coverage. Collision and comprehensive coverage will invariably cost more. Some drivers may be able to enjoy this coverage if they already have a comprehensive policy in effect. Vehicle owners who put their vehicles to work in a P2P car sharing network should first check with their San Diego auto insurance agents. The P2P company will offer some liability coverage, but there may be several limitations. In California, insurance companies cannot drop coverage just because a car owner decides to participate in a P2P car sharing network, but this is not the case in many other states.
4. Car Sharing Is Good for the Environment
According to the Green Car Congress, car sharing has already had a positive effect in terms of reducing traffic jams and air pollution. Moreover, sharing vehicles decreases auto manufacturing, which results in a lower carbon footprint, and corporate car sharing companies are expected to manage 100 percent electric fleets in the near future.
Get in touch with American Tri-Star if you need affordable car insurance quotes. San Diego drivers can request a quote online or call 619-272-2100 to speak with one of our friendly agents. We hope to hear from you soon.