Car Sharing for reward and your car insurance policy

In the credit crunch we are all always looking to save money. With journey to work costs constantly rising, you may be tempted into cutting your transportation costs by entering into a car sharing scheme.
Read this article by our resident car insurance expert before you go jumping into any agreements!

Car Insurance – Do Not Invalidate Your Car Insurance by Car Sharing
By Dave Healey

If you have ever been tempted to reduce your travel costs by entering into a car sharing scheme where you pick up friends or colleagues on a trip to work for example, you must ensure that your existing car insurance covers you and your passengers.

Car Sharing has become much more common in recent years as we all try to reduce our transportation and travel costs, particularly for our journey to work.
Certain large employers are now encouraging the use of car sharing in a bid to appear more ‘green’ and are even providing the facility in the workplace where you can meet and arrange car sharing with other like minded employees in your locality.

Before you enter into any such agreements with others it would be very prudent to check the policy wording of your car insurance to ensure that you are not breaking the law.There is usually a clause or endorsement or wording within your policy documents which excludes driving for hire or reward.

Check carefully the conditions of the policy wording and the exclusions. Make sure that the criterion of the policy offered is suitable for you.

If you are not sure about whether you are covered or might be breaking the law, always discuss this with your car insurance company or FSA regulated broker as they will be able to provide advice for your particular situation.
If they say that you are covered to drive your work colleague to your place of employment, ensure that they are aware of an exchange of money has or has not taken place for the service.

Always keep a note of the name of the person at the Car Insurer or Brokerage who provided the clarification of whether your car insurance policy covers you or not. Keep a note as well, of the time and date that the conversation took place.

If possible find out what position they hold within the car insurance company and their level of authority.

If they say that charging your work colleagues for journeys to work are acceptable under your current car insurance conditions, it would be prudent to ask them to provide in writing a clarification of the cover limits of your car insurance policy.

When you receive notification from your car insurance brokers or company that the driving for hire or reward exclusion is not in effect on your policy, you are able to provide documentary evidence to your employer or work colleague that you are indeed covered to carry them in your car.

Indeed you are in certain cases allowed to accept payment for driving them on a journey you would have had to make anyway to your workplace, with capital depreciation on your car being the same anyway no matter how many number of passengers, and payment for your traveling time. The money you collect can help towards the cost of next year’s car insurance.

So if your Car Insurance Company permits it, maybe car sharing can become green and economical.

Dave Healey is a specialist car insurance underwriter who has been underwriting Classic Car Insurance and motor insurance polices at Lloyds for over thirty years.

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