Car Share Insurance: The Problem

Car-sharing is a type of service that has been around for a while, but it’s a relatively small market. It’s an innovative service that has the potential to transform the car rental industry. But it’s causing some confusion with many insurance providers.

As a car-sharing owner, you offer your vehicle to car-sharing members who pay an hourly or daily fee to utilise it. So what’s the problem with gaining insurance as a car-sharing owner? Well, it’s quite complicated, but in a nutshell, typical insurance providers don’t provide a personal auto insurance policy that covers you for ‘commercial’ vehicle use. Car-sharing sits right in between commercial and personal use, so the lines are blurry!

Fortunately, here at KOBA Insurance, we’re the first Australian car insurance company to develop comprehensive car insurance specifically designed to be compatible with Uber Carshare.

In this article, we define what car-sharing is, detail the car-share insurance problem, outline how it can affect you and discuss why we have the perfect solution.

What is car-sharing?

Car-sharing is a new type of service that’s arrived in Australia. A car-share company, such as Uber Carshare, provides its members with a digital platform where they can list their car as available for rent. Members of Uber Carshare who are searching for a rental vehicle (also known as borrowers) may browse available vehicles and select one that suits their needs. The borrower then pays a daily or hourly rate to operate the vehicle. As a borrower, you can experience exceptional flexibility regarding the choice of vehicles. It’s also usually cheaper than renting from a rental car company. 

As a car-share owner, you can earn a passive income renting your car out. Sign up with Uber Carshare and list your car as available for rent. You could earn around $1,000-$2,000 a month by sharing just one vehicle. It’s important to understand how car-sharing services work for you as a car-sharing owner because, at the end of the day, it’s essentially one of the primary issues with gaining insurance, but we’ll get more into that further below.

Damage cover during bookings

Before reviewing the issues with car insurance and car-sharing, it can be important to understand that car-sharing companies, such as Uber Carshare, usually provide their own cover for damages or loss of vehicles during a booking. They cover your vehicle for damages, theft, third party loss, hail, flood and fire while a borrower is renting your vehicle. 

This car-share cover doesn’t cover you when you’re using your vehicle for personal use or when it’s parked. So, as a car-sharing owner, it’s a wise idea to gain your own personal comprehensive car insurance. But trying to find a personal auto policy coverage that’s compatible with a car-sharing service can be tricky. This is where the car-share insurance problem begins. 

What is the car-share insurance problem?

The problem with finding insurance coverage that’s compatible with car-sharing is that most insurance providers don’t have contingencies in place for car-sharing. Many of the comprehensive insurance policies on the market don’t actually mention anything about car-sharing. Their product disclosure statements don’t say you’re covered when sharing your car, but they also don’t say you’re not covered when sharing your car. It’s a particularly grey area in the insurance industry. This confusion comes down to the fact you’re essentially using your car for commercial purposes. 

What does it mean to use your car for commercial purposes?

It means you’re using your car as a source of income or to assist you in conducting activities that provide an income. For example, if you use a work ute that stores all your tools and materials, you’re using that vehicle for commercial purposes. But sharing your car doesn’t necessarily fit into that category. If you want to gain commercial insurance coverage for your vehicle, you typically require a commercial auto insurance policy. 

Car-sharing is a new service that many insurance providers haven’t yet accounted for. It’s essentially a repeat of when ride-sharing services, like Uber, first arrived in the Australian market. People driving for ride-share companies use their own vehicles, so they require personal comprehensive car insurance, but they’re technically using their vehicle for commercial use. It took a relatively long time for insurers to offer personal specialised policies that insure individuals who conduct ride-share services. 

What does this problem mean for you?

Ultimately, this confusion about personal car insurance and car-sharing services means you never really know if you’re insured or not! Not knowing if you’re insured could be extremely stressful, and what’s worse is making a claim, only to discover your provider won’t cover you. For example, you have a personal comprehensive cover and you’re a member of a car-sharing platform. While you’re using your vehicle for personal uses, someone rear-ends you, causing damage to your rear bumper and tail lights. You make an insurance claim for the damages, only to discover your personal coverage is null and void. This is because your personal cover doesn’t apply to vehicles used for commercial purposes.

The confusion around car-share insurance only increases as you read the product disclosure statements of varying insurers. Some state you can use your car for car-sharing purposes, but they also state you can’t use your car for commercial use. The definitions of these elements become blurry, and it’s a risk not really worth taking. It’s hard to know if you’re really insured when the insurer’s product disclosure statements may not be clear. This isn’t necessarily a deceptive tactic on behalf of insurers to avoid processing your claims. Car-sharing is just simply a new service that many traditional insurers haven’t yet addressed.

Another grey area about insurance for car-sharing is that many traditional insurers don’t have the means of identifying when you use your car for a car-sharing service. This means they’ll only find out that you’re a car-share owner if you tell them. It’s a recipe for disaster and it has the potential to breed dishonesty in the insurance industry. 

The problem with PAYD insurance and car-sharing

There’s a very specific problem when it comes to car-sharing and pay-as-you-drive (PAYD) car insurance policies. A traditional PAYD policy means you select a category of distances you expect to travel over a given period. For example, if you expect to travel 150km a week, you might select a category of 100km to 200km per week. The insurance provider then bases your premiums on your selected category. If you exceed this category, you might pay an additional excess and your premiums might also rise.

So what’s the issue with this and car-sharing? The issue is that your car is clocking kilometres when you aren’t driving it. It essentially makes a PAYD policy pointless. Even though you may add very few kilometres each week, the borrower might put hundreds of kilometres on your car. This means you may pay a much higher premium and excess. You miss out on the rewards of driving less and you may have to fork out the big bucks to gain personal comprehensive coverage for a vehicle you barely drive. Surely there must be a solution? 

The KOBA solution

Here at KOBA Insurance, we offer our policyholders a unique comprehensive cover that’s compatible with car-sharing and charges you for the kilometres you drive, plus an upfront fixed cost for coverage while your car is parked. You don’t select a category of kilometres with us. Your driving premium is based on the exact number of kilometres you, as the owner, drives. Regarding the PAYD issue above, you don’t have to worry about that as a KOBA policyholder.

Uniquely designed with Uber Carshare, KOBA offers car share owners pay-per-KM insurance when they’re using their car.

Owners get comprehensive coverage which covers their car while it’s parked between bookings, and a unique per-KM rate for insurance while driving.

KOBA works with Uber Carshare’s Instant Keys GPS device^.

By automatically switching between KOBA and Uber Carshare, our integrated tech distinguishes when your car is used for personal use and measures the KM you drive so you pay for the insurance you use.

As a KOBA customer, you pay a few cents per KM you drive, and an upfront cost to cover your car while parked for incidents like theft, fire, hail etc.

You can download the KOBA app to track trips, costs and policy docs.

Our exclusive partnership means we know exactly when you’re renting your car to borrowers. We stop applying premiums to your kilometres when someone else is renting your vehicle. It’s a seamless transition between a personal comprehensive cover and car-share coverage. You can take solace in knowing you’re covered as a car-share owner.

Get a quote online today.



Any advice provided on this site is general advice only and does not take into account your individual needs, objectives or financial situation. Terms, limits, conditions and exclusions apply. Before making a decision, you should carefully read the Product Disclosure Statement & Financial Services Guide (PDS & FSG), and the Target Market Determination (TMD), which are available at KOBAinsurance.com.au to help you decide if the product is right for you. If you purchase a policy, KOBA receives a commission, which is a percentage of your premium, and may be entitled to a profit share if certain thresholds are met in agreed periods. Please ask us for more details.