The rideshare rental industry appeared almost simultaneously along with Uber’s launch into the Australian market. Before the transport authorities regulated the emergent rideshare industry, the insurance companies had no specific product to cover rideshare. The whole industry was operating in a grey area, but it was not long before a few insurance companies began offering insurance cover for rideshare rental vehicles. These few companies were ahead of the major insurers who still did not even have an insurance policy to cover the owner-drivers of a rideshare vehicle.
After regulation, many of the big insurance companies eventually came up with a rideshare insurance policy. In most cases, however, this policy covered the vehicle's owner-driver, and many of the policies had clauses limiting the number of hours the vehicle could be driven for rideshare. Often the Policy Disclosure Statement (PDS) also contained specific provisions that the policy-holder must not let out the vehicle for hire and reward; in other words, the policy did not allow for the vehicle to be rented out to third parties.
The growth of rideshare as a form of passenger transport has, of course, increased the demand for rideshare rental vehicles. That demand was addressed very early by the rideshare market’s most significant player Uber who created a marketplace for rental cars to be accessed by their potential drivers. In doing so, they provided peace of mind for drivers because all approved vehicle solutions providers had to provide their rental contract and a valid rideshare rental insurance policy that ensured that the insurance policy would cover the driver in an accident.
The rideshare rental industry’s growth has again created another unregulated space in most Australian states. Queensland has enacted measures that identify rideshare vehicles into two classes, one for driver-owned rideshare vehicles and the other for rental rideshare vehicles; the other states are yet to follow suit. This lack of regulation has created opportunities for some non-approved vehicle solutions providers to supply their cars to renters while using an insurance policy that may not allow usage as a rental hire vehicle.
Using a vehicle as a rental on a policy not designed for rental vehicles carries inherent risks for the driver. Supposing the insurance company became aware that the policy is not the correct type for a rental vehicle, they could view it as a significant policy breach and refuse cover. It is an unfair situation as the renter may believe that the car he is paying for has bona fide rideshare rental insurance.
It is an issue that continues to grow unchecked because the non-approved rental vehicle market is now the most significant portion of the rideshare rental industry. Much of the non-approved rideshare rental car market growth is likely attributable to private individuals renting their vehicles. Many not being registered for GST can offer discounted rates because there is no GST in their pricing, which instantly reflects a 10% reduction as opposed to the pricing of approved vehicle solutions providers. Further rental rate reductions could be due to the discount rates that the suppliers pay for their insurance, as a non-rideshare rental policy is often much cheaper.
These anomalies in the rideshare rental market have brought about potential financial risks for drivers of rideshare rental vehicles. At the same time, they have created an unequal playing field for approved rideshare rental companies. It is a situation that requires further regulation to mitigate the risks to drivers and level the playing field for rental car providers. Until the authorities bring rules to address these issues, rideshare rental drivers need to be aware of the risks to make informed decisions. Current drivers of a rental car ought to request to view the insurance policy and even confirm that they have appropriate cover with the insurer.