Zipcar insurance

Gearbox has returned!

It was launched as a vehicle for Mickey Kaus to blog about cars in 2001. He

managed one entry that year, followed by another one at the end of 2002. 2003

was the golden year for Gearbox: Mickey managed a full nine posts! He then fell

back to two in 2004, and three in 2005.

Today, Gearbox gets a new byline: that of Paul Boutin, who has decided to write

about Zipcar. It’s unclear whether this fills the Gearbox quota for the

year, or whether more posts are forthcoming.

And in any case you’ll learn much more about Zipcar from reading the Gothamist

comments thread than you will by reading Boutin’s article. Boutin is in

full-on boosterish mode, and seems to have carefully excised all possible criticisms

of Zipcar bar one: "My only beef with the service is they need to wash

the cars more often."

I’m a Zipcar member myself, and have recommended them to others, and they do

seem reasonably good at learning from criticism. Last year, for instance, they

implemented a policy limiting people to booking Zipcars for no more than five

weekends at a time, in an attempt to cut down on "zipsquatting". But

it’s often still very difficult to find cars at weekends; there are still no

Zipcars within a one-mile radius of where I live in downtown Manhattan; and

the much-vaunted XM Radios rarely seem to work.

But much more serious than all those problems is the insurance situation. I

sent Zipcar an email asking them for clarification about three weeks ago, and

have yet to receive a reply. The FAQ

seems pretty cut and dried:

Unlike rental car companies, we don’t make you pay more for basic insurance

coverage. Insurance is just part of your Zipcar membership. Nice, huh?

There’s a deductible of $500, but they say that even that might be covered

if you book with a credit card:

Zipcar recommends that all members try to use a credit card, like an Amex

or MasterCard Gold, that may provide a deductible waiver. It could save you

some cash. So get out the glasses and check your credit card’s fine print.

But of course Zipcar has fine

print of its own, which is not very easy at all to find. My emphasis added:

10.1.1 Any person authorized to operate a vehicle under these Rules is covered

by an automobile liability insurance policy to state minimum levels

as well as comprehensive and collision coverage…

10.2.1 You are responsible for the full value of any damages caused

to Zipcar’s property or the property of all third parties which are neither

covered by insurance nor by manufacturer’s guarantee while you are

responsible for the vehicle as described in section 6.5 of these Rules.

What does this mean in English? It means that if something happens to your

Zipcar, chances are that Zipcar’s insurance policy will cover it. That’s what

"comprehensive and collision coverage" means – it means damage

to your car, not to anybody else’s.

But of course if you get into any kind of accident in which another car is

involved, there’s likely to be some kind of damage to the other car as well,

and possibly to the occupants of that car as well. And in that case, Zipcar’s

liability insurance only goes to state minimum levels. After that, you’re liable

for everything.

What are state minimum levels? I believe that in New York, they are $25,000

per person for bodily injury and $10,000 for property, while in New Jersey they’re

$15,000 per person for bodily injury and just $5,000 for property.

Now I often take a Zipcar to New Jersey – if I’m going on an Ikea run,

for instance, my closest store is in Elizabeth. And there are lots of very expensive

cars in New Jersey. So what happens if I get into an accident with a Mercedes

in the Ikea parking lot, and the damage to the Mercedes comes to $15,000? The

damage to the Zipcar will be picked up by Zipcar’s insurance, after I’ve paid

a $500 deductible. But Zipcar’s insurance only covers $5,000 of the damage to

the Mercedes: the rest, $10,000, comes out of my pocket. So I’d be liable, in

total, for $10,500.

And if there was any kind of serious accident, causing bodily harm, then my

liability could be much, much greater. If an occupant of the Mercedes had to

go to hospital, and ended up with say $200,000 in medical bills, I would be

liable for $185,000 of that.

I’m pretty sure all this is true – that most people driving Zipcars think

they’re covered when in fact they might end up with very large uncovered liabilities.

But it’s not easy to get an answer out of Zipcar: maybe they’ll leave a comment

on this blog. And the Zipcar website is far from useful when trying to get answers

to questions such as these.

In any case, it’s certainly true that Zipcar does not offer an option of extra

liability insurance, probably because if they did offer it then the users would

be shocked to realise that they’d been going without it all along. According

to the insurance information institute, non-owner liability policies cost

about $300 per year: is this something that Zipcar members should be buying?

And if it is, shouldn’t Zipcar be tipping them off to the fact?