Insurance and taxes dominate early discussion of car-sharing regulations

Talk of insurance and taxes dominated discussions of the Legislative Assembly’s first step toward regulating peer-to-peer car-sharing services on Thursday.

The Senate Commerce Committee testified about a bill sponsored by Sen. Joe Cryan (D-Union) that would require companies administering peer-to-peer car sharing to assume insurance liability for vehicles rented using their platform.

Car-sharing companies allow vehicle owners to rent their cars to others when they are not using them. These companies – which the bill distinguishes from rental car companies – already operate in New Jersey, though a lack of regulation means it’s often unclear which insurance is at fault after an accident.

“Now it’s the wild, wild west. You’re suing everybody and there’s carriers denying it. Where does the aggrieved party go?” said Sen. Jon Bramnick (R-Union).

While the measure would ensure that someone – the car owner, its driver or the car-sharing company – has insurance, there was disagreement over whether the coverage required under the bill would be sufficient.

“Since most traditional car insurance will not cover a car driven using a peer-to-peer service, the peer-to-peer company should always be the primary insurance for the period the car is is shared,” said Jim Lynch, president of the New Jersey Association for Justice, a legal advocacy group.

The bill, as written, would require car-sharing companies to only provide liability, bodily injury, and coverage for underinsured and uninsured motorists up to state minimum limits. Lawmakers have tried to raise some of those limits in recent months, including a successful push that will increase bodily injury liability coverage minimums next year and again in 2026.

Lynch called for car-sharing companies to be required to carry at least $1.5 million in liability coverage, the same coverage required by ride-sharing services like Lyft and Uber. Kenny Montilla, a lobbyist for car-sharing company Turo, noted that the bill would prohibit cars rented through a car-sharing service from being used as taxis or other rental vehicles.

“To talk about what we love about this bill, it ensures that there is no interruption in coverage, so whatever party tries to sue, there is coverage in place that is provided by the driver of the shared vehicle, the owner of the shared vehicle or the platform in the event that either party is uninsured or underinsured,” said Montilla.

Bramnick did not approve of the $1.5 million limit, but argued that car-sharing companies should be required to provide liability coverage above the minimum coverage.

Montilla said car rental companies are subject to the same limit, adding that car-sharing companies offer protection plans that provide additional coverage.

Rental companies, which compete directly with car-sharing companies, said their competitors should pay the same fees and taxes levied on car rentals because they offer the same service, even though car-sharing companies cars try to pretend they don’t.

“I know you’ve probably heard, and maybe you’ll hear in future testimonials, that peer-to-peer companies don’t rent cars,” said Dean Thompson, vice president of finance at Enterprise Rent- A-Car. “I encourage you to do a Google and look at their Google ads. You’ll see ‘rent the perfect car’. You’ll see ‘rent instantly’.

New Jersey rentals are charged a $5 per day homeland security fee in addition to sales tax levies. Carsharing companies pay sales tax, but not fees. They are also exempt from airport access fees and local car rental taxes charged in Newark and Elizabeth, Thompson said.

Lawmakers may find extending fees and taxes to car-sharing companies a hard pill to swallow. Car rentals are generally more expensive than carpools, and the added cost could make the new service less accessible to low-income residents.

“Recently I traveled out of state and had to rent a car for five days. I used one of the rated companies that are here. The cost for five days was $750, and that was not a luxury car,” said Sen. Bob Singer (R-Ocean), a co-sponsor of the bill who added, “Make it affordable for young people, make it affordable for people starting out or struggling – in these financial times, it’s so critical.

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