CarTrip is an app and website that allows people to make money by giving people lifts. As the website explains: “Passengers pay a small fee and get point-to-point transportation in a comfortable car and drivers are able to get a cost reimbursement for their costs.”
But will your car insurer pay out if you are using your car for carpooling, and being paid to do so?
Understanding CarTrip
Do not mistake CarTrip for the likes of Uber – the company is adamant that their service differs. CarTrip explains: “CarTrip is not a taxi service that picks up the rider at the riders location and drops off the rider at the rider’s destination. Taxi drivers (e.g. Uber drivers) make an income and profit from their service and use it as a primary or secondary job. In the case of CarTrip, when the driver is offering rides, the driver is travelling from one destination to another destination independent of any riders. The driver picks up and drops-off riders along the way with minor deviations for the convenience of the pickup and drop-off.”
Furthermore, the CarTrip platform determines the price that the driver charges. This is done using the reimbursement rates defined by the South African Revenue Service (SARS). “Drivers do not make a profit and instead partially recover some of their ordinary driving costs.”
Will your insurer pay a claim?
Car insurance providers appear to differ on whether you are covered if you make use of CarTrip. Natasha Kawulesar, head of client relations at OUTsurance, stated: “A once off trip where you are paid for driving a person to a destination does not affect your policy. If this becomes a more regular occurrence then our client would need to inform us.”
However, Philippa Wild, head of technical marketing for Discovery Insure, pointed out that the insurance industry considers driving someone in return for money as commercial use of your vehicle and not personal use. This means that you are using your car to generate an income, no matter how small the amount.
“If you were in an accident during a trip like this and needed to claim, a personal insurance policy would not approve or pay out your claim for vehicle damage or potential liability exposure. If you wanted to drive a person or people in exchange for payment, you would need to take out a commercial vehicle insurance policy,” added Wild.
If you are in an accident while using the CarTrip app to transport other people, and you do not inform Discovery Insure as your insurance company, Wild highlighted that the claim may be rejected. As per the policy guidelines, Discovery Insure does not cover the following:
- Commercial travelling, such as couriers, plumbers, electricians, garden services
- Carrying fare-paying passengers
- Giving lifts to passengers for profit
- Carrying goods regularly for business purposes
- Conducting driving lessons for reward or money
- Hiring the vehicle out for reward or money
When asked if OUTsurance would pay out a claim if a person was making use of CarTrip and did not inform them about using the platform, Kawulesar said: “We assess each claim on its merits and will make a decision based on all the information available.”
Carpooling and insurance
It is important to note that there is a difference between carpooling with colleagues to the office, and being paid to carpool people to a location that you are heading towards. Kawulesar noted: “We are very comfortable with covering our clients who carpool to and from work and we do not regard carpooling or lift clubbing as running a business. People who choose to carpool generally have an arrangement to contribute towards the expenses and running costs of the vehicle such as fuel, maintenance, etc. and each take turns to drive the others. This would be viewed more as a shared cost and not a paid service and will be covered under our personal product.”
However, Wild noted that even in this situation it counts as a paid service as you are receiving an income from it, and therefore you are using your car for commercial purposes.
Kawulesar added: “Where there is only one individual who is responsible for the transportation of the other members of the carpool on a daily or regular basis and receives compensation for this service; then this would be viewed as business use and we would require the client to notify us of these activities in order for us to provide the appropriate cover on the vehicle.”
“Offering cover for clients who engaged in carpooling, in the past, used to be a concern due to the passenger liability aspect. With the changes that were made to the Road Traffic Fund Act, where the driver and the owner may not be sued, the liability has fallen away. Our clients are welcome to carpool to and from work. This will certainly assist in easing traffic congestion,” said Kawulesar.
CarTrip vs Uber
When it comes to insurance, drivers making use of CarTrip would require different cover compared to Uber drivers. Kawulesar revealed that Uber requires drivers to have passenger liability cover as one of their minimum requirements. This type of insurance is only available under OUTsurance’s business product. “Our clients would need to let us know that they are Uber drivers and would then have cover under our business product and not personal product.”
Wild pointed out that Discovery Insure would not be able to offer insurance for Uber drivers or those making use of CarTrip as it does not offer commercial insurance. While your car may still be a personal asset, you are using it for commercial purposes to generate money for yourself and the car’s owner. Due to this you would require commercial insurance cover for the vehicle, which is very different to personal cover.
Wild added: “It is very important that insurance clients understand what their insurance policies cover. If they are using their personal assets for business purposes, it is essential that they have the correct cover. If they are unsure of what their insurance cover, it is always best for them to speak to a financial adviser to help make sure they are covered correctly.”
Safety using CarTrip
Safety is another concern, particularly for women. CarTrip noted: “One of CarTrip’s major goals is to create a safe community built on trust. Therefore we encourage members to rate other members and provide feedback regarding their trip together. The more information that members share about themselves in their “bio section” of their profile will also make it easier for other members to make a decision about sharing a trip with that member. This will create an environment where people will feel comfortable to travel together. Members can also use our secure messaging system to get to know each other before the trip and arrange a suitable meeting place.”
Furthermore, members are required to have a verified email address, cell phone number and/or Facebook profile to join CarTrip. All profiles, photos, ride offers, ratings and comments are also moderated by CarTrip “to maintain trust and respect in the community.”
For women who are concerned about their safety, there are also woman only rides. CarTrip explained: “For many women, carpooling can raise concerns about security, and although CarTrip has a number of safety features that create a secure and trusted community, it may happen that some women still don’t feel comfortable sharing a ride with another male member.
“That’s why we created a Ladies Only section, to allow members to plan a carpool where the driver and all passengers are women. It’s a great way for women to feel even safer, and we’ve found that it’s especially appreciated the first time our female members carpool with the CarTrip community.”
Justmoney’s view:
DiscoveryInsure is not the only provider to recommend commercial cover when using the likes of CarTrip. When Justmoney phoned Santam to get a quote for car insurance, informing the call centre consultant that the car may be used with the CarTrip app. The consultant was unsure as to what type of insurance was required. However, upon consultation with someone in the call centre, I was informed that commercial insurance was required.
Furthermore, the call centre consultant noted that should I have personal cover but make use of the app (i.e. use my vehicle for commercial purposes), if I am in an accident, my claim would not be paid due to non-disclosure. Should you decide to use CarTrip, it is vital that you inform your insurance company as not doing so may lead to extra costs for you when you claim following an accident.
With the need for commercial insurance over personal insurance, it does not appear to be worthwhile to make use of CarTrip to earn extra cash, as the remuneration seems to be quite small due to the pricing structure, and you will probably pay more for commercial car insurance than you would for personal insurance, most likely cancelling out the extra money you may have earned.
Article credit: https://www.justmoney.co.za/news/2016/08/29/how-carpooling-can-affect-your-car-insurance/
