Shared economy ventures are a growing market for independent operators. However, there may be insurance discrepancies involved with these businesses.

Today’s business climate is rapidly changing along with the development of new social media and networking platforms. People in Massachusetts and elsewhere have more opportunities than ever before to start up creative, lucrative and flexible businesses. Some of these businesses cater to an entrepreneur’s skills, while others allow people to be their own boss and capitalize on assets they have on hand.

Currently, one of the most popular and innovative new business models is known as “shared economy.” This type of company offers independent contractors a wide array of options to either earn a bit of spare cash or make a serious living. The most well-known of these ventures include companies like Airbnb, Uber, Lyft and RelayRides, which include the following services:

• Airbnb allows homeowners to rent out a room, apartment or entire home to people who are on vacation, traveling for business or need a place to stay for a night or two.
• Lyft and Uber are ride services that operate like taxi companies, with hosts using their own cars to drive customers where they need to go.
• Customers can rent bicycles from those who have contracted under RelayRides.

Additional shared economy ventures include handyman services, deliveries and errands, home repairs and cooking services. This type of business has become so widespread in America that, according to the National Association of Insurance Commissioners, about one-fifth of the country’s citizens have taken part in some type of shared economy service.

Insurance pitfalls

Unfortunately, many of those who have participated in shared economy businesses have discovered unexpected disputes in the form of insurance issues, theft, vandalism and more. Homeowners who are involved with Airbnb have been devastated to find that their properties have been damaged and possessions stolen by customers. Lyft and Uber drivers have run into legal problems after accidents or injuries. In many cases, homeowner and vehicle insurance policies did not cover damages, since they were meant only for the private owners of the policies, rather than for business owners and customers. This means that gaps in coverage did not protect against losses, theft, property damage or injuries to customers.

Some insurance companies have recently begun adding options for shared venture hosts to cover these gaps in coverage. Many of the largest companies, such as Airbnb and Uber, also offer insurance for consumers. Others, however, recommend that hosts get an insurance policy through a third-party agency. Many hosts are also finding this kind of insurance to be prohibitively expensive.

Insurance and business law can be complex, especially for start-ups. It is recommended that business owners get in touch with an experienced Worcester business law attorney to discuss the options that may be best for them.