How comprehensive is Zipcar’s insurance?
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Back in 2006, I started writing about Zipcar insurance. Zipcar — which is going public in an offering worth as much as $75 million — has a history of being more than a little disingenuous about the degree to which its drivers are insured. I spoke to them in February 2007, and they promised to change the language on their website; instead, in May 2007, they decided to start leaving sock-puppet comments on my blog, rather than actually do what they’d promised. Eventually, in October, they merged with Flexcar, which had much better insurance policies, and as part of the merger they adopted Flexcar’s insurance plan. (They had to, or face mass defections by Flexcar’s corporate client base.)
Today, they still tout their “comprehensive insurance” (the image at right is from this page). But when push comes to shove, it seems they’re still interested in putting liability onto their members when there’s an accident, like the time when Zipcar member Dale Douglas rear-ended Leslie Minto. Minto took Zipcar to court, but Zipcar won, saying that it was not liable “for harm to persons or property that results or arises out of the use, operation, or possession of [their vehicles] during the period of the rental or lease”. As a result, Douglas has to personally pay Minto’s damages.*
In the short term, this is probably good for prospective shareholders in Zipcar, which don’t need to worry about large potential legal exposure. The bigger picture, however, is that Zipcar might not have put its insurance worries behind it. Anecdotally, I still speak to a lot of people who say that they won’t use Zipcar because they’re worried about the insurance situation. And if Zipcar starts to get a reputation for sticking its customers with damages after telling them that they had comprehensive insurance, that’s not going to be good for its business.
*Update: Zipcar’s general counsel, Maria Stahl, has now responded, via email:
Our insurance program covers our members for third party liability up to $300,000 per occurrence. Accordingly, Mr. Douglas was in fact covered for this accident up to $300,000. Your posting stated that “As a result, Douglas has to personally pay Minto’s damages.” That simply is not true. If Ms. Minto’s damages had been in excess of $300,000, Mr. Douglas may have been held liable, exactly as he would be had he been driving his own car and damages resulting from an accident had exceeded his own policy limits.
Ms. Minto had brought suit against Mr. Douglas as the driver of the vehicle and against Zipcar. The court’s decision dismissed Zipcar from the lawsuit. Zipcar’s dismissal from the action does not in any way affect Mr. Douglas’ coverage under the policy we maintain for members.