from Hacker News

Fatal Collision Makes Car-Sharing Worries No Longer Theoretical

by branola on 5/20/12, 1:38 PM with 137 comments

• by newbie12 on 5/20/12, 3:27 PM

  RelayRides is not carrying enough insurance. Individual coverage from car owners is inadequate, and car owners can't be expected to purchase commercial car rental insurance just to participate in RelayRides.

  This kind of reminds me of AirBnB, where new forms of renting rely, in part, on deceiving users about the risks. RelayRides and AirBnbB business models rely in part on the savings from inadequate insurance coverage, where individuals are suckered into taking on commercial risks while still carrying only individual insurance and having unlimited personal liability.

• by haberman on 5/20/12, 3:20 PM

  It seems perverse that mere ownership of something can create liability.

  If she had failed to get some maintenance that made the car dangerous to drive, that would be one thing. But there is no indication that this is the case.

  If a psychopath rents a VHS from Blockbuster and then uses it to bludgeon someone's head in, is Blockbuster liable for that act of violence? Sure, a VHS is not intended to be used this way, but a car is not intended to be crashed either.

• by rayiner on 5/20/12, 5:03 PM

  I don't get the people complaining about the tort system. The tort system didn't create the losses here, the car and the driver created the losses. The people being severely injured created the losses, and frankly for severe injuries to 4 people in an accident that killed one person, $1.5 million is not an unreasonable estimate of the actual economic loss in this situation. The tort system is just allocating this loss to the parties involved.

  The fact of the matter is that cars are dangerous instrumentalities. A car accident can create enormous costs. In car sharing, someone must bear the cost of this risk. With its $1m of liability insurance, RelayRides is taking on a fixed amount of risk, and allocating the rest to the car owner. I think you'd be stupid to take on this risk without more compensation than what RelayRides provides, but that's what Ms. Fong signed up for.

• by libria on 5/20/12, 3:40 PM

  > On one hand, she is certainly an inviting target. After all, she has worked full-time at Google and is now finishing her degree at M.I.T. She probably has many millions of dollars of income ahead of her that a lawyer could try to garnish.

  Absolutely disgusting. Our system punishes those brilliant and capable minds that can drive the nations economy. Meanwhile, underachievers everywhere can sleep peacefully.

  Unless her car was in a state of disrepair, any lawyer (off the record) would have to admit she couldn't be responsible. But hey, assigning liability is so much more lucrative than truth.

  Also,

  > "RelayRides rejects any suggestion that it is acting in a self-interested manner. “Our interest is in protecting Ms. Fong,”"

  and

  > When I asked the company whether this meant cutting a check to Ms. Fong-Jones if she ended up personally liable, Alex Benn, a lawyer who oversees insurance for the company, had this to say: "What happens in any sort of accident with insufficient coverage?..."

  seem at odds.

• by atirip on 5/20/12, 3:43 PM

  Well, this shows how fucked up US system is... In Europe this absolutely cannot happen. First, everybodys is health is insured by state, so whatever injuries in whatever car accident anybody may have, there's no claims to present to anybody - state pays everything. Secondly, one in Europe shall not fear any "pain-and-suffering suits", and even more when you are just the owner of the vehicle. Third, liability insurance is unlimited so if you totally trash somebody's Ferrari with your Yugo, no fear, you are fully covered.

• by uptown on 5/20/12, 3:26 PM

  I think she's extremely naive to put her new car back into the pool before finding out how the courts handle this incident.

• by bcl on 5/20/12, 2:25 PM

  I don't understand why they aren't going after the dead guy's insurance. He's the one who was at fault, not the owner of the car, so his insurance should be the one to pay for the injuries.

• by robomartin on 5/20/12, 6:00 PM

  Hypothetical: I lend a hammer to a neighbor. He then goes and, after building the cabinet he needed the hammer for, kills two people with it.

  Why am I liable for his actions?

  This is the part of the rent-your-car story I just don't get. She had nothing to do with it. She should have zero liability. That's the part of the legal system that is really messed-up. Liability for this accident should sit squarely on the shoulders of those directly involved in causing it. The only way she should be liable is if the car had a known defect that caused the accident.

• by Tooluka on 5/20/12, 5:17 PM

  It is beyond my understanding how could Ms. Fong-Jones even considered being responsible. This a complete bullshit. It is like suing knife salesman for each harmful incident involving knifes he sold.

  Also I don't understand why people here say that "In car sharing, someone must bear the cost of this risk.". If lightning would stuck that car, who would they sue, Zeus?

• by jiggy2011 on 5/20/12, 2:45 PM

  Perhaps the answer here is to insist that a renter must either have valid insurance already that would pay out to third parties in the event that they were driving any vehicle. Most fully comprehensive insurance in the UK already covers this assuming you have valid fully comp on some car already.

  For example I (being fully insured on my own car) could drive a friend's car without being specifically insured on it and were I to get involved in an accident (that was my fault) then damage to third parties are covered but damages to my friend's car are not unless his insurance specifically covers me.

  If the renter doesn't have this insurance already simply increase the amount they have to pay to rent in order to cover it.

• by wazoox on 5/20/12, 2:51 PM

  The egregious part is the limited insurance coverage ($1M from the rental company and $300K from the renter). This probably wouldn't happen in Europe.

• by ricardobeat on 5/20/12, 9:01 PM

  Legal blabber aside, the tone in the article is infuriating - standard US media fear-inducing lawsuit crap. Instead of reporting on the legal hurdles or debating the consequences they just want to send a message that it's "dangerous" to engage in new business like this.

• by mratzloff on 5/20/12, 3:18 PM

  As an aside, I've never heard of this service but it sounds like a terrible deal for the owner. I assume the $10/hour is supposed to help offset wear and tear, although I hope the renter has to at least replace the gas they use.

• by pwthornton on 5/20/12, 5:06 PM

  Zipcar and similar car clubs makes a lot more sense than car sharing. You essentially join Zipcar and share the liability and car ownership costs. $1 million is not enough coverage in the case of a catastrophic accident, and the law and insurance companies have not caught up to car sharing.

  I would not rent my car out unless the liability issue was better taken care of. But then again, I don't get car sharing vs. car clubs.

  If you need your car so little that you can rent it out, why not just join Zipcar or another car sharing club?

• by tzs on 5/20/12, 11:40 PM

  I see a lot of discussion of the legal system and assignment of liability. There's an interesting fact about the legal system in non-criminal cases that is widely overlooked--there is usually no possible outcome that doesn't screw someone.

  Accordingly, when someone is found liable in tort, it doesn't necessarily mean the court is blaming them for the accident.

  Let me give a classic example. Three men go out hunting. They come to a clearing, and two of the men go around on the left and the third goes around on the right.

  A game bird flies up from the clearing when the two groups are on opposite sides. Both men on the left fire at the bird. One of them gets the bird. One of them misses the bird but hits their companion who was going around the right.

  It is not possible to determine which man shot the bird and which shot the human. Both shooters claim that they definitely shot the bird, of course.

  The third man sues the first two. There's no outcome that does not screw at least one of the three:

  1. The court could find neither shooter is liable, since it cannot be proven which actually fired the errant shot. That screws the third man since he got shot and cannot collect damages from the shooter.

  2. The court could find that both shooters are liable, and make each pay half the damages. Assuming each shooter can actually afford half the damages that is fair to the third man, but screws whichever shooter actually hit the bird.

  3. Furthermore, in #3, support it turns out one of the shooters has a lot more money than the other. Then in addition to screwing one of the shooters, the third man could get screwed in that he might not be able to collect enough to cover his medical bills.

  4. The court could find that the two shooters are jointly liable, and not even try to allocate blame between them. The third man can enforce the judgement against them however he wants. So, if one shooter has a lot of money and one does not, the third man would enforce against the one with the most money. This is good for the third man as it lets him get his medical bills covered. It potentially screws the wealthy shooter, though, if in fact he was the one who shot the bird--he's left holding the bag for all of the damages.

  The way it actually happens in most states is #4. The idea is that of the three men the one who least deserves getting screwed is the guy who got shot, so we want to maximize the chances that he can recover full damages, and can do so quickly. Only #4 ensures that.

  As far as the shooters go, if one of them isn't happy with the way the third man chooses to go about collating the damages, he's free to file a lawsuit against the other shooter to recover the amount he thinks he was unfairly forced to pay.

  Note that even though one of the shooters did not shoot the third man, it was his shot that created the ambiguity as to which one of them did shoot the third man.

  This is called "joint and several liability".

  This is a pretty good system. It lets the party that is actually injured get damages quicker to get them on the road to recovery (and keep them from getting bankrupted by medical bills), but still lets the parties that contributed to the injury fight it out among themselves to figure out how, ultimately, the damages should be split among them.

  Note: joint and several liability only applies to defendants who do have some liability, as determined by the court, I believe.

• by xxpor on 5/20/12, 4:28 PM

  If you wanted to rent your car out like this, how hard is it to set up an LLC so if god forbid something like this happens, they can't come after you personally?

• by cantankerous on 5/20/12, 6:58 PM

  I'd personally feel more comfortable putting my car into a car-share pool if I had to transfer the title to the pool in exchange for payouts and some kind of guarantee of a way to get the title of my car back to me should I want to retake ownership. Shouldn't this alleviate the personal liability issue? The deaths involved are most certainly a tragedy, but I find it impossible to fault Ms. Fong for any wrongdoing.

• by deepGem on 5/21/12, 3:13 AM

  Just an analogy - what if you rent your house and the renter happens to be a serial killer and 'uses' the house to murder people, and in one of the acts kills himself. Won't it be ludicrous for the authorities to prosecute the owner ? Unless they can establish that the owner had prior knowledge of the serial killer and rented the house on purpose.

  I don't understand how the owner of the car can be held responsible for the damages.

• by tibbon on 5/21/12, 3:06 AM

  Can someone explain to me why it isn't always the operator of the vehicle who is liable for death/destruction caused by their operation? Unless the brake lines were severed intentionally or the vehicle was provably neglected, then it would seem to me that the ultimate responsibility is on the driver who causes the accident- not the owner of the car or the company that facilitated the rental.

• by vinayan3 on 5/20/12, 9:37 PM

  Who was this person who rented the car? He was driving in the wrong lane. What kind of screening did RelayRides do?

• by ivankirigin on 5/20/12, 2:20 PM

  This is a bit of FUD IMHO

  Also, I've thought for some time that P2P car sharing should be over longer terms, like months.