Fatal Collision Makes Car-Sharing Worries No Longer Theoretical | Hacker News Reader

Fatal Collision Makes Car-Sharing Worries No Longer Theoretical

nytimes.com

137 pointsbranola137 comments

RelayRides is not carrying enough insurance. Individual coverage from car owners is inadequate, and car owners can't be expected to purchase commercial car rental insurance just to participate in RelayRides.

This kind of reminds me of AirBnB, where new forms of renting rely, in part, on deceiving users about the risks. RelayRides and AirBnbB business models rely in part on the savings from inadequate insurance coverage, where individuals are suckered into taking on commercial risks while still carrying only individual insurance and having unlimited personal liability.

I used AirBnB a couple of times, I think is a good idea. Prices aren't cheap at all, but you get an appartment with utilities and not a B&B room. However, I too keep wondering on the risks associated with renting. They are just difficult to estimate. The renter may put a bomb in the appartment, how do you protect yourself financially from this?

For this to make sense the number of the appartments (or cars) destroyed or damaged must me low enough that the cost for repairing is way lower than AirBnB revenues. Not sure this is possible with only 10% fee on renting although.

It seems perverse that mere ownership of something can create liability.

If she had failed to get some maintenance that made the car dangerous to drive, that would be one thing. But there is no indication that this is the case.

If a psychopath rents a VHS from Blockbuster and then uses it to bludgeon someone's head in, is Blockbuster liable for that act of violence? Sure, a VHS is not intended to be used this way, but a car is not intended to be crashed either.

It is conceivable that renting your car to a complete stranger, who might be a reckless driver, could result in serious harm to others. Even worse, in this case, RelayRides makes you partly responsible because you are allowed to interview the renter before agreeing to hand over the keys.

There's an adverse selection problem with RelayRides: terrible drivers who cannot afford or obtain auto insurance will be over-represented among their customers.

It's not that straightforward. You are required to have insurance to drive a car by law for a reason. So the question here is whose insurance pays, which depends on the policy terms, not that the car owner is guilty of anything. You can insure the vehicle for all drivers for instance, in which case there would be ambiguity.

Ownership implies responsibility. For precedence, see pets and children.

Guardianship is probably the word in the case of children ;-)

Children don't have owners, they have parents -- and the determination of responsibility is much less clear than your glib comment implies.

For example, is liability held by the biological parent, or by an entity acting in loco parentis? The distinction is crucial, as it is similar to the difference between an owner of a car, and a renter of a car.

With pets, again, if I lease or rent a pet it is not the case that the owner is necessarily responsible for the pet while I have possession. They may, but they also may not -- and it's this uncertainty which drives much frustration with tort law.

It seems less perverse when you think of tort liability as assignment of the costs of risk, rather than punishment for negligent behavior. When someone drives a car, this creates risk. Who should bear this risk? Somebody has to, the only thing the tort system decides is who. If you don't assign the risk to the owner of the dangerous instrumentality, then you assign it to either the operator or the general public. Assigning the risk to the public essentially socialized the costs of this activity (which generates private benefits), so as a practical matter the tort system allocates the risk to the owner and operator. Under this system the operator has a responsibility to use the dangerous instrument carefully, while the owner has the responsibility to carefully choose who operates the dangerous instrument.

What if the car was stolen?

This doesn't seem any less perverse to me. Shifting responsibility to the operator makes sense for injury resulting from operation. Shifting responsibility to the owner only makes sense for injury resulting from the ownership (improper device maintenance, etc).

If you can hold the owner of a car liable for a crash then what stops you from holding the creator of a car liable for a crash? Why not go after Toyota? By this line of reasoning Toyota is just as culpable as Ms. Fong.

Indeed, some tort actions have gone beyond owners and even pursued manufactures -- particularly gun manufactures.

The idea that an object owner or object creator might be liable for the actions of an object user is unreasonable and perverse. It has a chilling effect on innovation and forces small businesses (who can't afford to lobby regulatory protections such as the Graves amendment) out of the market.

If owners are not liable, what stops the owners of inherently dangerous businesses like car rentals from shielding themselves from the inherent risks created by their activity by having judgment-proof operators operate that risk-creating business?

The issue here is not regulation of lobbying. It's the very simple fact that driving a car creates substantial risks that have a price. Someone must pay that price. Owners and operators of dangerous instrumentalities are much more appropriate to bear that price than injured third parties. Owners are much more likely to be able to bear the cost than operators. If you shield owners, than you are practically shifting the burden to the public. I.e. socializing the costs. Yes it's great for small businesses to shift the costs of their profit-making activity to the public.

Ms. Fong's ownership of the car gives her the right to profit by renting it. It is fair to link that right with the obligation for risks created by that profit-making activity.

Judgement-proof operators? Nowhere was it suggested that operators ought be judgement-proof. In fact, I suggested the exact opposite.

The issue is exactly one of lobbying. As the article notes, the auto insurance industry has successfully lobbied to pass the Graves Amendment, which nullifies vicarious liability for auto rental. The article mentions this, and you can read more here: http://codes.lp.findlaw.com/uscode/49/VI/A/301/I/30106

Car rental owners are shielded by this lobbied-for legislation. The only question is whether Ms. Fong will qualify as a rental agency for the purposes of this law.

This is precisely a case where an industry has lobbied for an exemption which may exclude others from competing in said industry. It is a textbook example of regulation preventing disruption of an established industry.

Judgment-proof in the sense that the operator has no assets with which to pay the judgment.

The operator here is liable. But if the operator has insufficient assets to satisfy the damages, the owner is a more sensible person to bear the costs of the accident than the injured party.

It appears you're suggesting a structure of a business, where the owner isn't leasing to an unrelated party. An employer is liable for the actions of his employees (even non-employee employees) through entirely separate and much more appropriate channels.

You're suggesting that the person at fault is the person who has money.

This is fundamentally unjust.

When a joint enterprise accidentally injures a third party, generally all possible outcomes are fundamentally unjust. That's what makes tort law interesting.

By "judgement-proof" I believe he meant that the operators probably don't have much money and therefore you could win a case against them, but you could not collect. This is contrasted with the owners of the hypothetical car rental firm that would have assets that could be taken.

And if the hypothetical car rental firm has no assets, let's take the assets directly from the nearest bank! Those guys always have money!

If owners are not liable, what stops the owners of inherently dangerous businesses like car rental

How exactly is car rental an "inherently dangerous business," in the absence of a legion of berserk trial lawyers doing everything in their power to make it so?

Seems like a near-perfect illustration of begging the question.

So what if ms fong dies next next? Is the manufacturer now responsible since they are the next step up in the ladder of profiters of the car?

You could assign the consequences of blame arbitrarily like that but it would have negative consequences on society. For example people would be less likely to do anything since association can now always lead to 100% blame. It's like a mobster who tries to get you to repay a relative's debts. That never makes sense and neither does this.

Presuming Ms. Fong was driving, and her death was caused by operator error, she would likely be to blame. If her death is caused by a mechanical issue - yes, the manufacturer could be held liable.

If the manufacturer is at fault, then the manufacturer is responsible. If Ms. Fong was at fault, then she would be responsible.

However the problem here is that the renter was at fault, but he/she is dead, so now they're trying to pin the responsibility on the closest related entity (even though with NO fault by Ms. Fong) that can also pay the costs.

If the person who died (or his/her family) has no claims to compensation from Ms. Fong, then why would the people he/she injured have any claims from her?

...and if the manufacturer goes out of business, are the manufacturers of the parts in the car liable? And after that, the suppliers of the raw materials in those parts?

Most car owners also don't have a few million dollars in cash lying around, so they are equally "judgement proof". The way we have solved that problem is to legally require driver's insurance. It seems to me that that's a sufficient solution: as long as drivers are required to have insurance, there should be no problem with only holding drivers (not car owners) liable?

f you don't assign the risk to the owner of the dangerous instrumentality, then you assign it to either the operator or the general public.

Except that in this case there's another party: RelayRides, the rental management company. I think their own actions indicate an awareness that they will have to foot the bill for this... not just because Ms. Fong-Jones could probably recover her own costs, if any, in court, but also because the survival of their business depends on it.

Why wouldn't it clearly be the operator in that case then? Its impossible for even the most responsible of people to foresee what will happen for someone driving their car.

> while the owner has the responsibility to carefully choose who operates the dangerous instrument.

Anyone with a driver's license and enough money can walk into a car dealership and be "operating the dangerous instrument" an hour later. In this case would the car dealership be liable for a crash? Should they be vetting who they sell cars to? Or what about the state that issued the driver's license? After all, it's their actual job to vet drivers. By your logic the DMV should be liable for every accident caused by a driver with a valid license.

Also: bludgeoning someone to death is not an inherent risk of operation of a VHS tape. A fatal car crash is an undesired, but extremely common, foreseeable, and mostly unavoidable risk inherent in the operation of a car.

It's not mere ownership. It's owning something you rent to a 3rdparty. You should be responsible for decisions.

Liability is a function of risk which isn't necessarily a function of fault. In capitalism the returns and risks are, by default, routed to the owner.

Shares in a company whose factory gets wiped out by a hurricane you will experience a loss. This isn't the shareholders' fault, but it is a risk assumed by owning the asset. The shareholders could later sue management for being negligent and management could sue the construction company or risk advisor who said hurricane insurance is bull, etc. But the risk first comes to roost with the owners. A similar outcome would be expected if a tree on the factory premises toppled over and killed a pedestrian.

The principle difference between my example and the RelayRides case is the limited liability afforded by a common stockholder versus unlimited liability of a sole proprietorship (which is what you operate as if you directly interact with RelayRides as a natural person).

P.S. Those of you piping up about how this could never happen in Europe, note that this is because European countries tend to have higher insurance caps. In this case I would expect, in my completely un-qualified opinion, RelayRides to be ultimately responsible for implying that a $1 million liability cap was sufficient.

Are you sure your analogy is sound? Ms fong had a 100% share in the car, but she already lost 100% value of the car to an entity at fault which is dead. Like a natural disaster, both entities can not reimburse for the fault, however the ride sharing company has willingly assumed the role of protector in the car case. But now the fault for the damage caused by the car while operated by someone else is more analogous to people getting killed by rubble in the factory during the hurricane. The hurricane can't be sued, and the fault doesn't technically lie with the factory owners, so society doesn't have a right to assign the consequences of fault arbitrarily to the owner now does it?

No analogy is going to be apt since this is legal grey area. Ms Fong should have recognised that risk going into the situation.

Absent special laws protecting rental car companies from their drivers' actions they too would be liable for me taking my rental and ramming it into a McDonald's before fleeing the country.

Well I'm sure she knew the risks and realized it's safe because the ridesharing company would probably cover her.

I'm sure the special laws are there to be explicit since they already figured it made no sense to make the rental company at fault in situations like this. But this gives even more reason why Ms. Fong shouldn't legally be at fault since she's just like a rental company.

The analogy is flawed. If routine use of VHS tapes caused death and serious injury at measurable rates (which is true for motor vehicles), then yes: they'd be considered dangerous devices, and their owners would be legally liable for their safe use.

I don't get the people complaining about the tort system. The tort system didn't create the losses here, the car and the driver created the losses. The people being severely injured created the losses, and frankly for severe injuries to 4 people in an accident that killed one person, $1.5 million is not an unreasonable estimate of the actual economic loss in this situation. The tort system is just allocating this loss to the parties involved.

The fact of the matter is that cars are dangerous instrumentalities. A car accident can create enormous costs. In car sharing, someone must bear the cost of this risk. With its $1m of liability insurance, RelayRides is taking on a fixed amount of risk, and allocating the rest to the car owner. I think you'd be stupid to take on this risk without more compensation than what RelayRides provides, but that's what Ms. Fong signed up for.

Individuals are largely shielded from taking responsibility for the dangers and costs of car crashes in the USA by special exceptions and allowances. Companies and commercial renters are not so protected. That makes consumers drastically underestimate the real costs of their car use and RelayRides is going to face a hard task in keeping it covered up for their individual providers.

Both civil and criminal liability for killing and injuring others with a car non-commercially are incredibly cheap. The usual penalty for killing someone with a car is no penalty at all, even though over one hundred people a day die from driver negligence.

I agree. The solution is fewer restrictions on tort liability, not more. If people bore the costs of driving, they would drive less.

Besides seeking reimbursement for medical bills (Mr. Knecht’s alone are nearing $100,000, according to his lawyer, William Doyle Jr.), the injured people could also file pain-and-suffering suits. “If somebody crosses the center line and plows into your car, it does a number on you in terms of how you feel about getting into a car,” said Jonathan Karon, Ms. Hodges’s lawyer.

The above sort of BS is my complaint about the tort system. I've been hit by a car crossing the center line and plowing into my car. It didn't change how I feel about getting into a car, at least not in any debilitating way. I am perhaps (sometimes) a bit more alert to whether oncoming cars seem to be drifting towards the line. And please tell me how "pain and suffering" compensation is going to remedy any "feelings" you have about getting into a car?

> On one hand, she is certainly an inviting target. After all, she has worked full-time at Google and is now finishing her degree at M.I.T. She probably has many millions of dollars of income ahead of her that a lawyer could try to garnish.

Absolutely disgusting. Our system punishes those brilliant and capable minds that can drive the nations economy. Meanwhile, underachievers everywhere can sleep peacefully.

Unless her car was in a state of disrepair, any lawyer (off the record) would have to admit she couldn't be responsible. But hey, assigning liability is so much more lucrative than truth.

Also,

> "RelayRides rejects any suggestion that it is acting in a self-interested manner. “Our interest is in protecting Ms. Fong,”"

and

> When I asked the company whether this meant cutting a check to Ms. Fong-Jones if she ended up personally liable, Alex Benn, a lawyer who oversees insurance for the company, had this to say: "What happens in any sort of accident with insufficient coverage?..."

seem at odds.

She has clear liability. She agreed, after reviewing the request, to rent her car, for a profit, to someone who was a reckless driver and did serious harm to others (and, sadly, himself). I hate the U.S. tort system but some liability in this case is pretty reasonable.

No there isn't. You neither can nor should screen buyers and renters. This simply isn't your job. And it harms the business the big way. When people rent cars they also rent the risk.

The system creates liability for owners of instrumentalities that inherently create a risk to society, like cars.

Should to owners of a coal plant be liable if it explodes and injures people living nearby? Even if they weren't the ones who were operating it at the time?

If they lease or sell it, they should not.

If they sell their ownership interest they clearly don't have liability. If they lease it, they are profiting from the operation of the dangerous instrument, why should they be insulated from the risks of that operation?

Again, realize that the tort system does not create the costs. Operation of dangerous things has inherent costs. Ownership of property implies the right to receive the benefits for that operation, so it should imply the obligation to bear the risks of that operation.

The risk in this case is destroyed car, but not the health liability. If the car was dangerous, then there should be liability; if it wasn't, there absolutely should not.

No, the health liability is a risk of car operation. Accidents happen, and they injure people, even in the absence of negligence or poor maintenance. Driving creates a risk of injury to others, inherently.

Certainly, if it was their fault; i.e., if the plant was in a state of disrepair. If the coal plant exploded because the current operators acted in a willfully negligent manner, they should completely bear the cost.

I do not think it is that clear-cut, even for car rentals. If the car owner knows or should have known that the one renting it was a clear danger, I think he should have some responsibility. I also think law agrees with that. If it does not, why then does one have to show a driver's license to rent a car?

The gray area:

- if the owner could have known of the danger, how much effort do we think he should make to find out what the danger is?

- how high a risk increase can the owner let go? For example, if a 18 year old with a whiskey bottle in hand and a couple of obviously drunk friends wants to rent 'the fastest sports car you have', is it sufficient to check that the guy has a driver's license and does not look drunk or high? Would a check that he is not drunk be sufficient?

"I do not think it is that clear-cut, even for car rentals"

Well, it is that clear cut. As the article notes there is a law which unambiguously states that car rental agencies are not liable in this scenario: http://gregjohnson89.wordpress.com/2010/10/28/vicarious-liab...

As the article further notes, the only question is whether a loophole in the law's definition may cause Ms. Fong to not qualify as a car rental entity.

I did not click through that law, but only read the (emphasis added) "In any event, she has done her own legal homework and points to a federal law that can shield rental car companies from liability for accidents that happen while someone is renting the car.", and concluded (possibly incorrectly) that that law isn't watertight.

I agree, the agency that is supposed to be screening these people is called the DMV.

The DMV is not liable nor should it be. Why should the public bear the inherent costs of a profitable risk-creating activity that yields private profit?

What capability did she, or anyone have, to determine that this individual was a reckless driver? Given a lineup of 10 people, can you tell who is a reckless driver in 30 seconds or less without giving them a through skills test and psychological evaluation?

Our system punishes those brilliant and capable minds that can drive the nations economy. Meanwhile, underachievers everywhere can sleep peacefully.

This is a ridiculous statement. "Underachievers" (whatever the hell that means) certainly don't sleep any better for lack of an Ivy league education or salary from Google. I think most would agree that "our system" treats highly paid tech workers with elite educations pretty well, all things considered.

Well, this shows how fucked up US system is... In Europe this absolutely cannot happen. First, everybodys is health is insured by state, so whatever injuries in whatever car accident anybody may have, there's no claims to present to anybody - state pays everything. Secondly, one in Europe shall not fear any "pain-and-suffering suits", and even more when you are just the owner of the vehicle. Third, liability insurance is unlimited so if you totally trash somebody's Ferrari with your Yugo, no fear, you are fully covered.

I live in Germany, and not all of this is entirely true.

Liability insurance isn't strictly unlimited, the coverage limits are just very high - e.g. in Germany, personal damages are covered with a minimum of 7,5 mio. euro (with a maximum limit of 8 to 15 million per person, depending on the insurance company), and total damage is mostly limited at 50-100 mio. euro. For most accidents, these numbers are fairly equal to "unlimited".

About health insurance - I'm not quite sure how you come at the conclusion that state pays everything. Injuries in an accident are paid for by the liable party's liability insurance, the same as in the U.S.

Just for comparison, here in the us insurance for a 25k car and minimal (some 100 or 300k for the described case in the article) plus uninsured driver would be well over 1.2k per month.

In other countries i paid that per year for way more peace of mind.

I'm not sure why you're paying $1200 a month for insurance but that's not the norm for US based auto insurance at all.

I'm not. I pay 300 a year, but i don't even cover my car.

But yesterday i did the car coverage for a used 09 bmw 128iC.

Couldn't get any lower than that on several websites

Wow, I have no idea why you have those numbers! I guesssome important details must have been left out?

I have two vehicles less than 5 years old, with two drivers, with way more than $300k coverage for liability and comprehensive, and a $0 deductible by one of the top/largest insurance carriers in the U.S. and I pay $75/mo, total.

I pay more like $200 a month for a significantly more expensive car in Palo Alto. I have a clean driving record and a mainstream insurance policy. You should get competitive bids!

FYI, Europe is a continent, not a country. It's compromised of several individual countries, each with its own laws & institutions. There is almost nothing that is singularly true across them all. To make such a broad generalization, either ignores their differences or involves selective inclusion of countries you consider "your" Europe.

Not a reply to parent: - User link2009 - just to let you know, your account it dead - only you and those who have 'view dead' set can see your posts. Not sure how or why your account got killed, but you might want to start over if you want people to be able to view your comments.

I think she's extremely naive to put her new car back into the pool before finding out how the courts handle this incident.

I think she's thinking logically. From the perspective of a RelatRides lessor, fatal accidents are low probability events. That she experienced such an event yesterday doesn't change the probability that she'll experience such an event tomorrow. She's only naive if every single RelayRides lessor who reads this story is also naive to continue using the service.

I think it would be prudent to not use the service until this is resolved in court. I already was worried enough before this to not use p2p car rental services, but this data point shows they carry inadequate insurance.

She's naive because she's choosing to re-enter a partnership based exclusively on the perceived benefits (make money, save the world, etc.) without having a clear interpretation of the associated risks. Worse yet, she doesn't even have a clear answer on what her current liabilities are from her previous vehicle. I'm amazed her insurance company offers her a policy given her apparent disregard for liability she's potentially assuming on their behalf. I agree with your last sentence.

> I'm amazed her insurance company offers her a policy given her apparent disregard for liability she's potentially assuming on their behalf.

Insurance policies generally explicitly exclude commercial leasing of the vehicle, otherwise rental companies would already be ripping them off.

I don't understand why they aren't going after the dead guy's insurance. He's the one who was at fault, not the owner of the car, so his insurance should be the one to pay for the injuries.

If the person didn't have their own car, I would be surprised if they had their own car insurance. The victims could sue the estate, but there might not be a lot of money in it.

In my state, you can't get auto insurance without a car. You can be a licensed driver, you can have money to hand the insurance company for your premium, but if you don't own a car, you can't get car insurance. I don't know if you could get general liability insurance that would also cover you driving other people's cars.

But if it's the car that's insured, why do specific drivers have to be listed on the policy? The way I understand it is even if I'm not listed on someone's policy and I'm driving their car, their auto insurance covers my fuck up when I cause an accident.

Doesn't seem right, but I suppose that's the way it works.

When you're driving someone else's car, their collision/comprehensive insurance covers damage to their car (although there's a chance their insurance company will decline to pay or decide to sue you depending on the circumstances). Your liability insurance covers personal injury and property damage that you cause to others.

Drivers are listed for two reasons. The first is because a big chunk of car insurance is liability insurance. The second is because the probability of the insurance company having to pay to repair or replace your car depends on the likelihood one of the drivers will cause an accident.

This is all made more complicated by the fact that personal injury lawsuits are a numbers game. If the driver didn't have insurance and their estate has very little money, it doesn't matter that making them liable is a slam dunk case. It's not worth the effort. On the other hand, if the car owner has insurance, is alive, and has a lifetime income potential in the tens of millions of dollars, that's worth a lawsuit even if the probability of success is lower.

It feels scummy, but most personal injury lawyers are investing in cases. They'll be happy to take a lower probability chance on a bigger return. It's not all that different from venture capital, although you could argue pretty easily that VCs are a more positive force for social good and value creation.

That's odd, in NC where I was originally licensed, you had to prove insurance coverage before they would issue you a license.

When you rent a car, you usually pay for insurance specifically for that car, for the few days you drive it. Why would this be different?

It seems like EasyRide doesn't follow the rental companies time tested way of doing insurance. Having a company policy is interesting, the problem is the courts assume company policies cover vehicles "owned" (through actual ownership or lease) by a company and driven by employees or people under their hire (e.g. consultants). They probably should have gone with part of the fee being an actual insurance policy for the driver for the car. It would be a much easier and known business scenario for the courts.

If your business model requires new rulings by the courts, then you better have deep pockets.

The insurance company can't have the cake and.eat it too.

Either the owner pay as if she wasn't doing a business, or the dead guy's pay as if he was driving a rental. Mine is pretty basic and i can pay my deductible for rentals.

Liability law allows the injured party to go after both, and if one of them was without insurance . . .

Because that's not how car insurance works. You purchase a policy to insure your car (and in most cases other drivers in your family). Car insurance doesn't insure the individual against whatever vehicle he may be operating on any given day. That's why your car insurance is based upon the make/model/year of your car, as well as which state it is registered in, how many miles you drive it per day, etc.

It also seems from the article that they haven't determined who was at fault.

Some car insurance policies cover rental cars. My insurance covers car rentals, so that I don't need to pay for the insurance coverage when I rent a car.

From the article: "According to a preliminary police report, their car was hit by an oncoming car that seemed to have been traveling south in their northbound lane. The report concluded that Mr. Fortuna would be found at fault."

That actually is how car insurance works. There's a property insurance component ("collision" and "comprehensive") that insures you against loss or damage to your property. Then there's a more expensive liability insurance component that insures you against liability as a driver of any car. The property insurance portion is optional as long as you own your car outright.

Correct.

Liability is the "required" part of insurance in most states. It follows you from car to car.

What has likely happened is that they person who rented the car didn't have insurance of their own. That seems likely, since it's kind of pointless to have automotive liability insurance if you don't own a car. Even more so if you're used to purchasing insurance at the point of sale when you rent a car.

Incorrect.

Car insurance generally "follows the car." If you lend your car to your buddy and he gets into an accident, your insurer is the primary. If you don't have insurance on the car, then if he has insurance it may cover some of the associated costs. That all gets settled in court.

Collision is not required, but liability is.

Driver liability is primary. The owner's insurance only comes into play in case the driver isn't insured or it doesn't cover full costs. That's the standard at least.

You insure a vehicle. If the vehicle is insured, then that insurer is the primary, so in the event of a claim, that is the insurance company on the hook.

Now it is true that when you sign an insurance policy, part of the contract makes the insurance company liable for the driver if he is in an accident in another vehicle and for whatever reason there isn't a primary or the primary uses subrogation to recoup damages from that insurer.

But that is not the most common case, and certainly shouldn't be used as the standard for what to expect would happen in this case.

Have you ever heard that women's insurance rates are typically more expensive than men's because they lend their cars more often to others? Now why would that be if the drivers were responsible as opposed to the vehicle insurer? Again, civil law is not black and white. Insurance companies have teams of lawyers in every major city in the country to fight their way out of claims when possible and certainly there are times that they succeed in recouping some damages from other insurers. My point was that this is not the norm. The primary insurance company is the first in line when a claim is to be made.

That's true for covering the material damage, but in my understanding the liability for corporal damage/medical costs is not as black & white, and falls on the driver first.

Hypothetical: I lend a hammer to a neighbor. He then goes and, after building the cabinet he needed the hammer for, kills two people with it.

Why am I liable for his actions?

This is the part of the rent-your-car story I just don't get. She had nothing to do with it. She should have zero liability. That's the part of the legal system that is really messed-up. Liability for this accident should sit squarely on the shoulders of those directly involved in causing it. The only way she should be liable is if the car had a known defect that caused the accident.

The difference is that car accidents are a foreseeable and inherent risk of car operation, but not hammer operation.

Car accidents are foreseeable and inherent, but this guy was driving in the wrong lane, what if he intentionally did it as a suicide (not saying he did, but hypothetically).

What if someone rented a car and intentionally drove it into a crowd of people?

It is beyond my understanding how could Ms. Fong-Jones even considered being responsible. This a complete bullshit. It is like suing knife salesman for each harmful incident involving knifes he sold.

Also I don't understand why people here say that "In car sharing, someone must bear the cost of this risk.". If lightning would stuck that car, who would they sue, Zeus?

Nobody would be sued, the owner of any property bears the risk of its accidental destruction unless they transfer some or all of that risk to an insurance company.

Perhaps the answer here is to insist that a renter must either have valid insurance already that would pay out to third parties in the event that they were driving any vehicle. Most fully comprehensive insurance in the UK already covers this assuming you have valid fully comp on some car already.

For example I (being fully insured on my own car) could drive a friend's car without being specifically insured on it and were I to get involved in an accident (that was my fault) then damage to third parties are covered but damages to my friend's car are not unless his insurance specifically covers me.

If the renter doesn't have this insurance already simply increase the amount they have to pay to rent in order to cover it.

It seems that most insurance in the U.S. already covers this, but RelayRides fear that with enough of these cases the insurance companies will change the plans to ban the practice of loaning out cars to strangers, thus ruining their business.

> insist that a renter...have valid insurance [or pay a higher fee]

If you don't own a car it is just about impossible to buy a liability insurance policy. I know this. I tried. I tried very hard.

I don't own a car myself, but since I often rent a car when I travel, I decided that I'd try to buy a third-party liability policy instead of paying the absurd prices that Avis or Dollar charge (>$20 a day).

I called about 10-15 insurance brokers, and not one of them had ever written a "non-owner" policy. The standard answer I got was, "You have to own a car to get liability insurance; yes, it'll cover you for other vehicles you drive, but you have to have your own car for us to create a policy for you".

I realize that you are in the UK, so the situation might be different there. But in the US (and Canada), I think that RelayRides would have to be the one to provide the coverage, because the average RelayRides user (who likely lives in the same city and doesn't own a car) won't have his own liability insurance (and couldn't get it even if he wanted it!).

Does this mean there's a niche for someone with a lot of land to buy many very cheap-to-insure vehicles and sell them to people who don't want a car but need one for insurance?

The vehicles stay on the land.

I'm really curious about the actuarial basis of this policy.

I'm pretty sure the basis is "You don't own a car? You some kinda communist?".

Large corporations don't react well to things that are unusual. Only 8% of US households do not have a car[1]. 1/6th of those are concentrated in New York City alone, home to just 1/38th of American households and the only American city where fewer than half of households own a car, the rest are scattered throughout the country, with smaller concentrations in various other urban areas.

Statistically, Americans have cars. I'd lay decent odds that if alister were in New York, though, he wouldn't have had any trouble.

[1] http://www.bts.gov/publications/highlights_of_the_2001_natio...

I guess they could offer this insurance themselves and I'm sure if this became a big enough thing the insurance companies would want a slice of the action.

I wonder if it would be possible to persuade them to insure a "theoretical car" that pays no road tax and does 0 miles per year.

I knew that credit card companies offer some auto coverage as well, but didn't realize until I researched it now that it doesn't include liability insurance.

One of my contracts once required that I have $1 million in insurance company to work for them, including coverage for any employees traveling related to the work. That was 10 years ago though, and 1) I don't recall if the insurance included liability insurance, and 2) I think it only covered travel related to business, so while an odd-ball thought, it probably won't work for you.

What do the people in the NE (NYC, Boston) do? I thought that quite a few don't have cars but instead rent them for trips or for moving. Surely a number of them are in the same boat.

It seems that non-owner liability policies do exist; so says http://www.caranddriver.com/reviews/do-i-need-insurance-to-r... . For that matter, GEICO mentions the possibility at http://www.geico.com/information/aboutinsurance/auto/insight... .

And http://www.carsdirect.com/car-insurance/can-i-get-car-insura... "Every insurance provider is required to offer non owner car insurance, so you shouldn't have a difficult time finding this insurance if you need it. Well known providers such as State Farm, GEICO or Progressive are providers you might consider. Some banks offer auto insurance, so those that do will also be able to offer non owner car insurance." ... "Non owners insurance quotes are available from all of the major insurance companies. Progressive, Geico, State Farm, and Nationwide are just a few insurance companies that offer insurance coverage to people who do not own cars. You can also get quotes from insurance consolidators like esurance or netQuote."

If you have any sort of credit record then most of the annual-fee credit cards provide rental insurance, and the fee is typically less than a small number of days of paying the rental agency.

...but, as noted elsewhere, this does seem to generally exclude liability coverage so really isn't very helpful to you.

Actually, $20+ /day is the price of _additional_ liability insurance. In most states liability coverage up to state defined Fnancial Responsibility Limits is included in rental price. Ask at the time of getting your car to avoid additional fees.

For instance, Avis says [1]:

Avis provides liability coverage for its vehicles as required by applicable law. In most instances, this will include coverage for the renter or authorized driver up to the financial responsibility limits of the applicable jurisdiction at no additional charge. In some states, the liability coverage provided is excess to any other applicable coverage.

Excluded are CA, TX, UT.

Dollar has similar policies, but they are less specific in their generic policies [2]:

B. Third Party Liability Claims: Unless otherwise required by applicable law, a renter and/or any additional authorized driver (and the respective insurance company of each) is primarily responsible for all third party claims of personal injury, including death, and property damage caused or arising from the use and operation of the DOLLAR vehicle during the rental. (To the extent DOLLAR is required to provide coverage, in spite of the terms of the rental agreement, it shall only be in an amount necessary to satisfy the minimum financial responsibility limits required by applicable law.)

[1] Select (USA, Protections/Coverages, Automobile Liability) at https://www.avis.com/car-rental/content/render-faq.ac

[2] http://www.dollar.com/AboutUs/GeneralPolicies.aspx

The egregious part is the limited insurance coverage ($1M from the rental company and $300K from the renter). This probably wouldn't happen in Europe.

Don't know about the rest of Europe, but here in Germany we also have limited insurance coverage.

By law the minimum for person damage is 7.5 million €, for property damage 1.12 million €. Usual sums are 50 or 100 million €.

So in the end it's very unlikely for something like that to happen in Germany.

Legal blabber aside, the tone in the article is infuriating - standard US media fear-inducing lawsuit crap. Instead of reporting on the legal hurdles or debating the consequences they just want to send a message that it's "dangerous" to engage in new business like this.

Articles like this tend to create a risk-averse culture, causing people to be afraid of failure. An article that was more negative towards the lawyers/tort law would be much better, I think.

As an aside, I've never heard of this service but it sounds like a terrible deal for the owner. I assume the $10/hour is supposed to help offset wear and tear, although I hope the renter has to at least replace the gas they use.

Zipcar and similar car clubs makes a lot more sense than car sharing. You essentially join Zipcar and share the liability and car ownership costs. $1 million is not enough coverage in the case of a catastrophic accident, and the law and insurance companies have not caught up to car sharing.

I would not rent my car out unless the liability issue was better taken care of. But then again, I don't get car sharing vs. car clubs.

If you need your car so little that you can rent it out, why not just join Zipcar or another car sharing club?

The main thing is: - she don't need the car often - buys expensive new car - buys a car that can't sit for a long time

If she researched a little more she would have not got a new hybrid but some old diesel. It's probably cleaner than agasoline hybrid doesn't generate all the upfront manufacturing garbage and batteries that are awful for the environment and reuse a car that is already made anyway.

Agreed. A Prius can be a great car, but for her particular situation, it doesn't make a lot of sense. The core market for Prius owners are people who drive their cars a lot.

While I'm not a fan of lung-clogging diesels, in this case, it may make a bit of sense. There are people in my area with 20-year-old or so diesel cars. They don't need need the same kind of driving maintenance that hybrids do.

I don't know if she has access to Zipcar or a similar service, but if she does, that would have probably been the best bet. Let someone else deal with the ownership, storage, maintenance and liability.

> If she researched a little more she would have not got a new hybrid but some old diesel. It's probably cleaner than agasoline hybrid

I was under the impression old diesels were dirtier than gasoline engines. New clean deisels like in Audi's no, but old ones? But you're saying they're cleaner?

Diesels are not cleaner, but it's a complicated story because you have to factor in the process to make a car (and batteries in the case of hybrids and electrics), the fuel efficiency, the emissions given off and the longevity.

Diesels are, however, very fuel efficient and can last a long time. But they give off small particulate matter that gets lodged into people's lungs, shaving days, months and years off people's lives. I don't know how clean clean diesel cars are, but every time I see black soot coming out of a truck, I want to punch someone. That's going straight into our lungs.

Not suggesting a 50s diesel. But anything up to the price of a prius would be better.

Point is, even a gasoline suv pollutes less than a prius overall if you don't use it that often.

Just arguing that as an engineer, you should look at other solutions instead of jumping the bandwagon. Let pointy hairy bosses and ruby on rails guys do it instead.

*>Just arguing that as an engineer, you should look at other solutions instead of jumping the bandwagon.

That's what I'm doing. I really want a diesel for my next car, but a clean diesel. Just wondering if there are any less expensive options than a new or relatively new Audi.

Previous diesels were awful because of the stuff we had in the diesel itself. The engines are still the same, mostly. any year car you get that still have good compression will give you a clean burn (if it's too lean, you get too much nitrogen oxide, to rich you get carbon and shoot).

if you want to go the extra mile you can either buy the hamburguer smelling vegetable conversion kits (too much hassle to refil imho) or you can spend extra and put a modern catalytic system in the old car and be done with it.

a 2000 VW, Audi, mbez will do wonders and cost from 6 to 12k.

I see a lot of discussion of the legal system and assignment of liability. There's an interesting fact about the legal system in non-criminal cases that is widely overlooked--there is usually no possible outcome that doesn't screw someone.

Accordingly, when someone is found liable in tort, it doesn't necessarily mean the court is blaming them for the accident.

Let me give a classic example. Three men go out hunting. They come to a clearing, and two of the men go around on the left and the third goes around on the right.

A game bird flies up from the clearing when the two groups are on opposite sides. Both men on the left fire at the bird. One of them gets the bird. One of them misses the bird but hits their companion who was going around the right.

It is not possible to determine which man shot the bird and which shot the human. Both shooters claim that they definitely shot the bird, of course.

The third man sues the first two. There's no outcome that does not screw at least one of the three:

1. The court could find neither shooter is liable, since it cannot be proven which actually fired the errant shot. That screws the third man since he got shot and cannot collect damages from the shooter.

2. The court could find that both shooters are liable, and make each pay half the damages. Assuming each shooter can actually afford half the damages that is fair to the third man, but screws whichever shooter actually hit the bird.

3. Furthermore, in #3, support it turns out one of the shooters has a lot more money than the other. Then in addition to screwing one of the shooters, the third man could get screwed in that he might not be able to collect enough to cover his medical bills.

4. The court could find that the two shooters are jointly liable, and not even try to allocate blame between them. The third man can enforce the judgement against them however he wants. So, if one shooter has a lot of money and one does not, the third man would enforce against the one with the most money. This is good for the third man as it lets him get his medical bills covered. It potentially screws the wealthy shooter, though, if in fact he was the one who shot the bird--he's left holding the bag for all of the damages.

The way it actually happens in most states is #4. The idea is that of the three men the one who least deserves getting screwed is the guy who got shot, so we want to maximize the chances that he can recover full damages, and can do so quickly. Only #4 ensures that.

As far as the shooters go, if one of them isn't happy with the way the third man chooses to go about collating the damages, he's free to file a lawsuit against the other shooter to recover the amount he thinks he was unfairly forced to pay.

Note that even though one of the shooters did not shoot the third man, it was his shot that created the ambiguity as to which one of them did shoot the third man.

This is called "joint and several liability".

This is a pretty good system. It lets the party that is actually injured get damages quicker to get them on the road to recovery (and keep them from getting bankrupted by medical bills), but still lets the parties that contributed to the injury fight it out among themselves to figure out how, ultimately, the damages should be split among them.

Note: joint and several liability only applies to defendants who do have some liability, as determined by the court, I believe.

I understand that this is a somewhat contrived example used to illustrate a point, but there are many more options available to the court in this case:

1. Both men that fired a shot are found liable because firing a shot knowing one of the men may be in a line of fire is irresponsible and potentially criminal.

2. None of the men that fired a shot are found liable because the third man went into a section of the forest he wasn't supposed to go into because by doing so he put human life under significant risk.

3. The establishment that manages the hunting grounds (a private organization, the state, or even the federal government) is found liable because it didn't properly segment the area to sufficiently prevent risk of human injuries.

4. All three men are found liable because they didn't properly define necessary rules in order to prevent risk of human injuries.

In fact, in this case I'd argue that it's irrelevant which man fired a shot that hit the third man. Either

a) Both mean fired when they weren't supposed to, in which case they're both liable.

b) The third man went where he wasn't supposed to, in which case he is fully liable for his own injuries.

c) A third party organization that manages the hunting grounds didn't properly set up the rules, in which case it is liable.

d) The men were responsible for setting up the rules themselves, in which case all three of them are liable.

If you look at the case this way, you can easily find an outcome that doesn't screw anyone. Someone was responsible for ensuring proper safety precautions, and they didn't do their job. That party (or group of parties) is liable. The others are not.

If you wanted to rent your car out like this, how hard is it to set up an LLC so if god forbid something like this happens, they can't come after you personally?

Simply setting up LLC (or any other type of entity) is not sufficient. To shield your personal assets LLC needs to be properly capitalized and be managed like a proper business. Essentially, it will at least require carrying some kind of commercial insurance, plus having extra money in the bank for operating expenses (how much - depends on the business). This sort of defeats the idea of effortless car sharing.

I'd personally feel more comfortable putting my car into a car-share pool if I had to transfer the title to the pool in exchange for payouts and some kind of guarantee of a way to get the title of my car back to me should I want to retake ownership. Shouldn't this alleviate the personal liability issue? The deaths involved are most certainly a tragedy, but I find it impossible to fault Ms. Fong for any wrongdoing.

Just an analogy - what if you rent your house and the renter happens to be a serial killer and 'uses' the house to murder people, and in one of the acts kills himself. Won't it be ludicrous for the authorities to prosecute the owner ? Unless they can establish that the owner had prior knowledge of the serial killer and rented the house on purpose.

I don't understand how the owner of the car can be held responsible for the damages.

Can someone explain to me why it isn't always the operator of the vehicle who is liable for death/destruction caused by their operation? Unless the brake lines were severed intentionally or the vehicle was provably neglected, then it would seem to me that the ultimate responsibility is on the driver who causes the accident- not the owner of the car or the company that facilitated the rental.

Well, he's dead. In some sort of spiritual way, he is liable. What's going on here isn't about the guilt or real liability, it's about trying to turn pain and suffering into money. The simple rules for that are if you're going to try to sue someone, sue someone that has money and sue someone that you can get the money from.

RelayRides, I would think, would be a better target, you might get more money faster but the reality here, unfortunate or not (depending on who's side you take,) is RelayRides is going to be sued and Ms. Fong is probably going to be sued too. Tell me why RelayRide's funders aren't the ones holding the bag here, figure that one out, you nearly never hear about that.

Sometimes it sucks. Sometimes people don't seem to mind. OJ Simpson was acquitted of murder (re: as in found not guilty by a jury) and yet he was sued for moneys due to the death of his ex-wife and her friend, everyone sort of felt okay with that. Ms. Fong, strictly speaking, didn't crash the car, but she stood to profit from the cars use and it was her car and she has insurance, she's going to likely get sued. It's a real bummer those folks got hurt, sounds pretty rough to me, I hope someone makes them whole or as whole as they can be. It's the system we've got.

I guess I see it as his estate being the one that is responsible financially at this point. Life insurance policy, home, car, investments, etc.

Her making $10/hr off it really just doesn't seem to factor in in my mind. Wrecking the car wasn't an expected use of that rental.

Who was this person who rented the car? He was driving in the wrong lane. What kind of screening did RelayRides do?

Beyond checking that he has a valid drivers license (not suspended, etc), what else do you expect them to do?

Exactly. Before renting anything to anyone should they undergo a 2-day full psychological evaluation to ensure that they are mentally stable, plus a full driving skills assessment? No, that's clearly absurd.

It should be the driver and his estate that is responsible in the end. If that estate does not have enough resources to cover the damages, then... well, shit happens and sometimes there's just no recourse for bad luck.

This is a bit of FUD IMHO

Also, I've thought for some time that P2P car sharing should be over longer terms, like months.

With all the financial products the banking world creates, I'm sure someone will come up with an insurance policy for this. Sure it won't be cheap, but will be a solution.

Agreed. The market will sort this out. RelayRides needs to completely protect its car lenders.

Agreed

"That's why we can't have nice things"

Too much liability issues and because of (most likely) an irresponsible driver now they're (or better, someone that can pin any cost on the injured) goes after the car renter, car manufacturer, road authority, etc. They'll probably make a way for Steve Jobs to be liable as well if they can, I guess

"no longer theoretical" No crap sherlock. People have been getting injured in car accidents for the past 100 years.

By getting into a car and driving you assume a non zero risk of being injured or killed in a car accident. Do you want zero risk? Live in a bubble

Now his suddenly becomes a multi-million dollar cash cow for several 3rd parties.

Except for the victims of course, who'll have to deal with giant health costs (because of similar excess liability and regulation meandering by the authorities and greed by the medical industry)

Sure, liability is important, if it involved a drunk driver for example, or a fault that comes from the car maker.

But there's always a risk! And preventing some risks causes even more risks sometimes.

By getting into a car and driving you assume a non zero risk of being injured or killed in a car accident.

By getting into a car and driving you assume a non zero risk of being sued for damages caused by a car accident.

Except that in this story she didn't cause the accident.

> This is a bit of FUD IMHO

Would you care to tell us why? As-is, I could rewrite your comment as "Java is better than C IMHO" and it would be exactly as useful.

Take the single worst case possible and act as if this is normal = FUD

It is easy to spot this: if the article implies even in a slight degree that you'll die if you use a web service, it is FUD

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