General Motors Company (GM), Avis Budget Group Inc (CAR): Automakers Invest in Car-Sharing Industry

Regulatory pains

Despite its growing popularity, some peer-to-peer sharing networks are facing legal questions regarding who is liable when a transaction does not go as planned. States such as Washington, California, and Oregon have passed laws that make a car-sharing service and its insurers liable for vehicle damages, as if it owned the car during the rental period. Laws also target insurers and prevent them from canceling car owners’ policies. Some large insurers have found a way around the rule, for example, Geico rewrote its auto policies in 2012 to deny coverage to cars rented to others in states that permit it.

Despite meddling by regulators, the expected growth of and entry of major automakers into this sector shows it’s worth watching closely.