How Carpooling Impacts Your Insurance

In 2022, Canada’s national average for gas prices surpassed $2/litre. Although gas prices have decreased modestly since then, they’re still higher than many would like.

Today’s world is increasingly fast-paced, and both traffic congestion and environmental concerns continue to rise dramatically. As such, carpooling has emerged as a seemingly reasonable (not to mention popular) solution. The concept of sharing rides with others to commute to work, school, or other destinations not only promises to reduce the number of vehicles on the road but also presents an opportunity to foster social connections and cost savings. While carpooling undoubtedly has its benefits, there is an ongoing debate about whether it poses potential risks to the participants.

Here at Excalibur Insurance, we talk – well, insurance. When you’re purchasing auto insurance, whether that’s standard or even classic car insurance, you will likely be asked many questions by your broker about the type of car you drive, how often you drive it, and its usage. You’ll need to be upfront with your insurance broker – especially if your vehicle’s “usage” includes carpooling.

The Concept of Carpooling & Its Benefits

Carpooling, by definition, is the act of several passengers riding in a single car to a shared destination. The reason for carpooling is generally to save money on gas; if you have, for example, co-workers who work the same hours as you, it might make sense to swap out the driving each day rather than have you both drive your individual cars. Carpooling can also be more convenient, it lessens the amount of traffic on the roads, and it can reduce your ecological footprint. It’s a win-win situation.

Ontario is seeing some of the highest gas prices in the country. You can check CAA’s gas prices calculator to view the province’s individual cities.  Many Ontarian cities, like Toronto, are seeing gas prices in the 145/L+ range, and even higher. Choosing to carpool just makes sense!

Now, let’s look at it from a different perspective. Given whose blog you’ve landed yourself on, you might have an idea of what perspective that’s going to be: an insurance perspective. Carpooling might have a large number of benefits, but there’s safety to be considered, health implications, and, as you might expect, a potentially larger risk exposure.

Safety Considerations and Health Implications with Carpooling

Carpooling does come with several safety considerations and health implications. For one, the safety of carpooling is hugely dependent upon the driving habits and skills of the participants. Reckless driving, speeding, or distracted driving can put everyone in the vehicle at risk. Carpooling with responsible and experienced drivers can significantly mitigate this risk.

Although we’ll get into it in our next section, carpool participants may need to inform their brokers of their car’s usage and acquire any additional liability coverage that they may need to be fully insured in the event of an accident while carpooling.

Now, for health implications: carpooling does involve close contact with others in confined spaces, which made it a difficult activity during the COVID-19 pandemic. As restrictions have loosened, carpooling is plausible, but it’s still important to be aware of the possibility to transmit viruses. If you’re sick, or if any of your passengers/drivers are, don’t carpool!

How Carpooling Might Make Insurance More Complicated

Now, how exactly does carpooling affect insurance? Can it increase your risk exposure?

Carpooling introduces additional complexities to the realm of insurance, as it involves sharing private vehicles with multiple passengers. While carpooling can be a cost-effective and eco-friendly commuting option, traditional personal auto insurance policies may not always adequately cover the unique risks associated with this practice.

Carpooling changes the “usage” of your vehicle, which requires you to inform your broker. Undisclosed changes in usage, whether that’s choosing to carpool, driving for delivery companies, etc. may not be insured if you don’t disclose them to your broker and wind up in an accident because of them.

To address this issue, some insurance companies offer specialized carpooling or ride-sharing insurance policies. These policies are specifically designed to cover vehicles while they are being used for carpooling or ride-sharing purposes. They typically include higher liability limits to protect against the increased risk of carrying multiple passengers if you had to file a claim after a car accident and may also provide coverage for medical expenses or property damage.

How Fault is Determined

Another concern is determining fault and liability in case of an accident involving a carpool vehicle. If an accident occurs while carpooling, determining the responsible party can become more complex. Insurance companies may need to investigate whether the driver was at fault, or if the negligence of another driver caused the accident. Moreover, if a carpool participant is injured, it may be challenging to allocate fault and establish liability among the parties involved.

Carpooling may also involve different individuals taking turns driving their vehicles. This rotation of drivers raises questions about insurance coverage continuity and whether all drivers’ policies extend to cover carpool use. Insurance companies might need to analyze the frequency and regularity of carpool participation to determine if it falls within the scope of individual policies or requires a separate carpooling insurance arrangement.

Contact Excalibur Insurance to Discuss Changes of Use

Carpooling presents a compelling solution to traffic congestion, environmental concerns, and cost savings for commuters. However, it is essential to recognize and address the safety considerations, health implications, and insurance complexities associated with this practice. As with anything in life, there’s always upsides and downsides!

If you are considering or currently engaging in carpooling, take the proactive step of notifying your Excalibur Defender to explore suitable insurance options that adequately cover your needs and mitigate potential risks. By collaborating with a Defender, you can make informed decisions and embark on a carpooling journey that prioritizes safety, peace of mind, and a greener commute for all.