Shared Mobility

Understanding The Insurance Risk of Carsharing

Carsharing, the practice of sharing a car for traveling and commuting purposes, has become popular in recent years because it absolves its members from the cost burden associated with vehicle ownership–not least of which is insurance. Rather than requiring members to have their own insurance, carsharing operators provide insurance as a function of their memberships.

Traditional private automobile insurance practices rely upon vast actuarial data sets to calculate the risks of a given driver. Yet, to date, few studies have aggregated data on carsharing on a large scale to better assess the risks for insurance costs.

This lack of understanding prompted researchers at UC Berkeley’s Transportation Sustainability Research Center to work with six carsharing companies and key players in the carsharing market across North America to put together a data set of insurance losses, demographics, and overall miles traveled. The authors of the study were then able to compare these data sets to national statistics on private automobile insurance risks to garner insight into whether carsharing operator insurance costs are commensurate with the risk.

In total, 28 years of operator data was collected, which included 328,726 trips made by 334 vehicles. Female drivers made 50% of these trips, 18 to 25-year-olds made 27% of the trips, and the average driver age was 35.20 years. In addition to trip data, operators provided their loss run reports, which show the number of accidents along with cost details.

Among the more than 325,000 trips, only 125 claims were made with an average cost per claim of $4,630. While this seems both infrequent and reasonably inexpensive, the rates and costs are higher than private automobile use. However, except in the older age brackets (65 years or older) the difference was not substantial

Seven key findings from the research include:

– The average cost per carsharing claim was US$4,630, median of US$2,189
– Average insurance claim cost/mile was US$.07
– Average insurance claim cost/trip was US$1.76
– Average claim cost per insured-vehicle/year was US$789 for carsharing
– Data showed a heightened risk for drivers over 65 years of age
– 18-25-year-old drivers had moderately higher risk compared to other adults
– Mid-age adults (30-65) had the lowest risk (similar to national average)

Despite the considerable amount of data collected and analyzed, the researchers concluded that the data did not definitively suggest that carsharing is either safer or riskier than typical vehicle use. Future research should build on this work by examining factors unobserved in this study, especially where carsharing drivers and trips might be different from private vehicle drivers and trips.

To read the full report, follow this link and to explore more research in shared mobility, check out TSRC’s website here.
 

Please note that this article expresses the opinions of the author and does not reflect the views of Move Forward

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