How carpooling can affect your car insurance

The concept of carpooling is far from new. Sharing rides can save considerably on expenses, and break the boredom of a long trip, or a transit in peak-hour traffic.

Carpooling with strangers, on the other hand, via an online portal, is a comparatively novel arrangement. Such a service is offered by CarTrip, a South African business that offers passengers point-to-point transportation in exchange for a small fee.

The concept is solid, especially in the face of decreasing Covid restrictions. However, there are insurance implications for the driver, and it’s important to note these.

Understanding CarTrip

Don’t mistake CarTrip for the likes of Uber – the company is clear that their service differs.

Taxi drivers make an income from their service, as a primary or secondary income stream. In the case of CarTrip, the driver is already travelling from one destination to another, independent of any riders. Pickups and drop-offs take place along the route, with minor deviations for the passengers’ convenience.

“The CarTrip platform determines the price that the driver charges,” the CarTrip website notes. “This is done using the reimbursement rates defined by the South African Revenue Service (SARS).”

Drivers don’t make a profit, and instead partially recover some of their driving costs.

Will your insurer pay a claim?

Car insurance providers differ on levels of coverage, if you are engaged in a paid carpooling service.

Natasha Kawulesar, head of client relations at OUTsurance, states, “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 we would need to be informed.”

If you are in an accident while using CarTrip to transport other people, and you do not inform your insurance company, your claim may be rejected, depending on your insurer. It’s worth checking your policy to find out if it excludes commercial travelling, fare-paying passengers, giving lifts for profit, carrying goods for business purposes, or hiring out vehicles for reward.

When asked if OUTsurance would pay out a claim if a person was making use of CarTrip and did not inform them, Kawulesar said, “We assess each claim on its merits and will make a decision based on all the information available.”

Carpooling and insurance

It’s important to note that there is a difference between carpooling with office colleagues and being paid to drive people to a location you are heading towards.

Kawulesar notes, “We are very comfortable with covering 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 of the vehicle such as fuel, maintenance, etc., and each takes turns to drive the others. This would be viewed more as a shared cost and not a paid service and would be covered under our personal product."

However, there is a caveat, Kawulesar notes. "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 that person receives compensation, this would be viewed as business use. We would require the client to notify us of these activities so we can provide the appropriate cover.”

Kawulesar says that offering cover for clients who carpooled had previously been a concern because of passenger liability. “With the changes that were made to the Road Traffic Fund Act, where the driver and the owner may not be sued, this liability has fallen away,” she says. “Our clients are welcome to carpool to and from work. This will certainly assist in easing traffic congestion.”

CarTrip vs Uber

CarTrip and Uber require different insurance cover, Kawulesar notes. Uber requires drivers to have passenger liability cover as one of their minimum requirements. This type of insurance is available under OUTsurance’s business product.

It's important to understand what your insurance policy covers. If you are unsure, speak to your insurer or a financial adviser.

Safety using CarTrip

Safety is a growing concern, particularly for women. The CarTrip website notes, “One of CarTrip’s major goals is to create a safe community that’s built on trust. We therefore encourage members to rate other members and provide feedback regarding their trip together.

“The more information that members share about themselves in the ‘bio’ section of their profile, the easier it is for other members to make a decision about sharing a trip with them. This will create an environment where people will feel comfortable travelling 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 in order to join CarTrip. All profiles, photos, ride offers, ratings and comments are moderated by CarTrip “to maintain trust and respect in the community”.

For women who are concerned about their safety, there are women-only rides. CarTrip explains, “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 a man.

“That’s why we created a ‘ladies only’ section – to allow members to plan a carpool where the driver and passengers are exclusively 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.”

CarTrip has an app that drivers and riders can use, but it was disabled at the beginning of the pandemic. It will be launched again when the business is fully operational.