It’s the legislative season in Florida, and one of this session’s bills addresses “peer-to-peer” car rentals. Peer-to-peer rentals are just what they sound like: Rather than renting a car from a big company like Hertz or Avis, you rent a car from another person.
The practice has been compared to renting out a home on sites like Airbnb. As with Airbnb and entities like Uber and Lyft on the transport side, a technology company acts as an intermediary between the renter and the customer. Several companies in this business such as Turo and Getaround are already up and running.
How Should We Regulate the Peer-to-Peer Economy?
The Florida legislature is now considering a new law to regulate peer-to-peer rentals. The bill addresses issues like the collection of sales tax and road maintenance surcharges. Predictably, the “technology company” intermediaries are arguing against taking on any responsibility for these transactions. They claim they don’t own vehicles, aren’t rental car companies, and shouldn’t be required to follow the same rules.
Whatever one may think about taxes and surcharges, there is a glaring problem with the current legislation. It fails to address some substantial legal questions, such as who is responsible when the person driving a peer vehicle caused a crash and injures others.
Are Rental Cars Analogous?
Large rental car companies are usually exempt from liability for people who crash their rental cars. In other words, just owning a rental car will not make them responsible for a wreck. They can be responsible, however, if they rent out a car with defective equipment such as bad brakes. In that scenario, the rental company has been “actively negligent” in causing or contributing to a wreck.
However, peer-to-peer rentals don’t involve rental car companies as they’re typically understood. Thus, current federal immunity would probably not make Mom and Pop renters immune when someone crashes their car. Outside the traditional rental system, owners will likely remain liable if they loan their car to someone who causes a wreck behind the wheel.
Holding the Right Person Responsible
Some Florida lawmakers have proposed changing Florida law to protect owner-renters. Their idea is to treat peer-to-peer renters like large rental car companies. Under this proposal, they would have the same immunity from liability which large rental car companies now have under federal law.
One may think this is a reasonable idea. After all, the most responsible person for running a red light is the person actually driving.
The problem is that giving blanket immunity to peer-to-peer renters provides no protection to the public. In a state where roughly 25% of drivers have either no insurance for injuring others, or not nearly enough of it, it makes no sense to carve out another exception from well-established liability rules. Owners know and expect to be liable for use of their vehicles because that has historically been the rule governing all of us.
Eliminating owner liability might be good for “disruptor” gig economy companies and casual renters. Unfortunately, it would do nothing for other drivers and pedestrians who run the risk of being seriously injured or killed every day. It also ignores the fact that large rental car companies have protocols to ensure safety that might not be followed by a casual renter just looking to make some extra cash.
Saying No to No-Liability
A no-liability law would not account for the fact that some renters don’t own cars, and accordingly don’t have car insurance in the first place. Rental car companies can solve this by offering insurance coverage at the rental counter. A peer-to-peer renter who hands you keys in their driveway, on the other hand, won’t be able to do this. Offering auto insurance at the time of the rental requires complicated business arrangements to be in place.
Several years ago, companies like Uber and Lyft were arguing about similar issues. They claimed they were just “technology companies” who should not have to accept responsibility for negligence on the highways.
After much debate, the legislature rejected that notion and passed laws requiring insurance for Uber and Lyft drivers. They now require Uber and Lyft to carry insurance for injuries to passengers or third parties.
It would be reasonable to do the same thing for peer-to-peer transactions. Some form of insurance should be required before individually rented vehicles—which have particular maintenance standards or screening requirements for those who rent them—are turned loose in large numbers on our streets. The additional cost of insurance could be spread over thousands of rental transactions. The bottom line would not be greatly affected, and the business model will still work.
Don’t Let Accident Victims Be Forgotten
No one should want to stand in the way of progress. It may be good for Florida’s economy overall to promote peer-to-peer rentals. However, if lawmakers are going to address this new business arrangement, they should give fair consideration to accident victims in the process.
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