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Editor’s note: As Matt Nickerson wrote in his January article, Liberty Mutual has identified five “Megatrends” for 2014 that potentially have large implications for independent agents, insurance carriers and customers. We’ll discuss each trend throughout the year to help you understand the issues, what they mean for your business and how they will impact our industry.

 Even if you haven’t heard of the “Sharing Economy,” chances are you’ve already heard about the concept. It’s changing the way some people vacation — and allowing others to turn their homes into part-time hotels — with companies like airbnb, VRBO and Couchsurfing. It’s providing city-dwellers with options beyond standard taxi transport — and turning a few of them into occasional chauffeurs — thanks to ride services like Uber and Lyft, along with peer-to-peer sharing of private vehicles through companies such as RelayRides. And particularly for younger generations, it’s challenging the very ideas of “possessions” and “ownership,” focusing instead on access and utility when it comes to items like cars, homes, workspaces and more. The thought process is relatively simple: You don’t always use your assets, such as your car, or even your home. Why not allow someone else to lease that excess capacity? In the case of airbnb or VRBO, users can make a little money renting out a room — or their entire house — for short stays. And car-sharing services spread the cost of owning a vehicle among hundreds of customers or more, meaning people pay only for what they use. There’s even a service to help boat owners share their watercraft.

Increased flexibility, with immediate implications

While sharing has always been an important part of society, today’s technology is allowing physical assets to be shared among vastly larger groups of individuals, according to “Insurance in the Sharing Economy,” a paper by Paul Y. Mang of Avarie Capital and William M. Wilt of Assured Research.

This new way of thinking and doing business has provided far greater flexibility, but it also has raised a slew of new questions for individuals, municipalities and others — including insurance companies.

For example, personal auto policies generally include coverage for when an owner allows a friend to borrow the vehicle. But most specifically coverage if the car is rented or leased to someone, and make no exception for short-term rentals that last hours instead of days. The act of renting out rooms in a person’s home or apartment presents insurance issues as well. While some peer-to-peer sharing companies have policies covering damage from guests, there are liability issues for the host, along with questions about how homeowners and renters coverages apply. Because these situations fall outside of normal “sharing” that is usually covered under insurance policies, customers and agents might be unaware of these issues — or may even be unaware of the trend itself.

What do you think about the "Sharing Economy"? Would you stay in another person's home, or would you rent out your home? How do you insure your home if you rent it out? Stay tuned next week for what the future holds in light of the Sharing Economy?

Source: Liberty Mutual Insurance
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