Before it ended its last legislative session in December, the Michigan Legislature passed a three-bill package that will establish broad peer-to-peer car sharing regulations in the state if Democratic Gov. Gretchen Whitmer signs it into law.
The bill was presented to Whitmer for signature on Jan. 8 and awaited her signature as of late Jan. 9.
In instances of car sharing, the legislation would assign drivers -- not car owners -- with financial injury liability if any damage occurs while they are operating the shared vehicle.
But specific circumstances for determining the liable party can get murky, according to Erica Eversman, an attorney and founder of the nonprofit Automotive Education & Policy Institute, which seeks to improve the safety of the collision repair process and improve relationships between repairers and insurers.
The legislation is “just all over the map on who's got the liability for an activity, whether it's the peer-to-peer sharing network operator, whether it's the vehicle owner, whether it's the vehicle driver,” Eversman said. “It says it can be a combination of those.”
According to a legislative summary of the package, the Michigan car sharing law would require both the shared vehicle owner and driver to be insured during each car sharing period under an automobile policy that either recognizes the vehicle is used for a peer-to-peer car sharing program or doesn’t exclude the vehicle’s use in such a program.
Insurance would have to provide residual third-party liability insurance and personal protection insurance and property protection insurance, except that the peer-to-peer program wouldn’t have to ensure personal protection benefits if the car owner elects to decline such coverage or if an exclusion applies to the vehicle under the Michigan Insurance Code, according to the summary.
The legislation could affect collision repair shops in DRP networks that are required to provide a loaner car to the customer under an insurance company agreement, Eversman said.
The bills specifically exclude car rental companies from the new requirements.
Shops “need to make 100% certain with the insurer two things: One, that they will not be classified as a peer-to-peer sharing network or a sharing vehicle operator,” Eversman said. Shops need to verify their insurance company network will not “expose them to liability” as a shared vehicle owner under the provision.
“Also, they need to absolutely double-check with the garage carriers and their liability insurers to make 100% certain that they will be covered if, in fact, they are…providing vehicles to consumers who are utilizing the direct repair network program,” Eversman said.
Shops typically don’t disclose the actual terms of their DRP agreements with their business insurers, or anyone for that matter, according to Eversman.
DRPs typically require collision repairers to indemnify the referring insurer. But if the Michigan car sharing law leaves an automotive insurance coverage gap in cases where collision repair shops provide temporary replacement cars for consumers, garage/business insurers could cry foul because they typically stipulate that repair shops not indemnify anyone unless under an insured contract, Eversman said.
“It gets into a whole messy conundrum,” she said. “This is another extension of, ‘Hey, if you're making a loaner car available to a consumer, you better make 100% certain that your garage carrier knows that you're engaging in that activity, and agrees to cover whatever happens, because otherwise the business could be in a whole lot of trouble in terms of financial exposure.”
The legislation states it will take effect nine months after enactment, meaning if Whitmer signs the three bills in January, they will activate in October.
Brian Bradley